Exhibit 22-4

Refer to Exhibit 22-4. The firm sells its product at P₁ and produces Q₁. Given this situation,

Question

Exhibit 22-4 Refer to Exhibit 22-4. The firm sells its product at P₁ and produces Q₁. Given this situation,

Quizplus · Accepted Answer

Total cost includes both fixed and variable costs, so it is equal to area 1 + area 2 + area 3. Total revenue is the rectangle of P₁ and Q₁, which is equal to area 1 + area 2. Total variable cost is the trapezoid bounded by the y-axis, the total cost curve, and the output level of Q₁, which is equal to area 2 + area 3. Therefore, the best choice is C.

Exhibit 22-4 ​ Refer to Exhibit 22-4. the Firm Sells Its Product at Sells

Exhibit 22-4 Refer to Exhibit 22-4. the Firm Sells Its Product at Sells