Economics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 4

FIGURE 10.3 Short-run profit maximization for a purely competitive firm. The MR = MC output enables the purely competitive firm to maximize profits or to minimize In this case MR (= P in pure competition) and MC are equal at an output Q of 9 units. There, P exceeds the average total cost A = $97.78, so the firm realizes an economic profit of P ? A per unit. The total economic profit is represented by the green rectangle and is 9 × ( P ? A ).

Suppose price declined from $131 to $100. This firm's:
a. marginal-cost curve would shift downward.
b. economic profit would fall to zero.
c. profit-maximizing output would decline.
d. total cost would fall by more than its total revenue.