The following figure depicts the marginal cost curve, the average total curve, and the average variable cost curve of a certain firm.

-Refer to the figure above.What is the price on the market when the firm makes a profit of -$3,00?

Question

The following figure depicts the marginal cost curve, the average total curve, and the average variable cost curve of a certain firm.
 
-Refer to the figure above.What is the price on the market when the firm makes a profit of -$3,00?

Quizplus · Accepted Answer

When the firm makes a profit of -$3, the price on the market is equal to the average total cost at the quantity where the marginal cost equals the average total cost. In this case, that occurs at a quantity of 6, where the average total cost is $5. At a price of $5, the firm's revenue would be $30 (6 x $5), and their total costs would be $33 ($5 x 6 + $3 fixed cost), resulting in a profit of -$3. Therefore, the answer is B.

The Following Figure Depicts the Marginal Cost Curve, the Average