Figure 14-5
The figure below depicts the cost structure of a firm in a competitive market.

-Refer to Figure 14-5.When market price is P₄,a profit-maximizing firm's total cost can be represented by the area

Question

Figure 14-5
The figure below depicts the cost structure of a firm in a competitive market.
 
-Refer to Figure 14-5.When market price is P₄,a profit-maximizing firm's total cost can be represented by the area

Quizplus · Accepted Answer

The total cost for a profit-maximizing firm is represented by the area under the average total cost (ATC) curve up to the quantity produced, which is Q₄. At price P₄, the firm produces Q₄, and the cost per unit is P₂, so the total cost is P₂ × Q₄.

Figure 14-5 The Figure Below Depicts the Cost Structure of a Firm