Consider the following diagram where a perfectly competitive firm faces a price of $40. Figure 8.1
-Refer to Figure 8.1. At the profit-maximizing level of output, ATC is
A) $26.
B) $30.
C) $31.
D) $40.
E) $44.

Question

Consider the following diagram where a perfectly competitive firm faces a price of $40.  Figure 8.1
-Refer to Figure 8.1. At the profit-maximizing level of output, ATC is
A) $26. 
B) $30. 
C) $31. 
D) $40. 
E) $44.

Quizplus · Accepted Answer

The profit-maximizing level of output is where MC = MR, which occurs at Q = 8. At this level of output, the ATC is $31, as shown by the intersection of the ATC curve with the demand curve. Therefore, C is the correct answer.

Consider the Following Diagram Where a Perfectly Competitive Firm Faces