Figure 10.4

Figure 10.4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 10.4.What is the amount of its total fixed cost?

Question

Figure 10.4
  
Figure 10.4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 10.4.What is the amount of its total fixed cost?

Quizplus · Accepted Answer

The total fixed cost is the vertical distance between the total cost curve and the variable cost curve at zero output. In this case, the total fixed cost is $2,520 (where the red dot intersects the y-axis).

It cannot be determined what the output level of the firm is or what its profit is, so we cannot answer any questions related to those variables.

Figure 10.4 Figure 10.4 Shows the Cost and Demand Curves for a and Demand