In Figure 17-4,below,initial demand,marginal cost,and marginal revenue curves (none of them shown)caused the firm to produce the profit-maximizing quantity Y₀ at a price of P₀.Now the demand and marginal cost curves have moved to those shown,with the marginal revenue curve running through point L.
Figure 17-4

-If the firm in Figure 17-4 above maintains its set price of P₀,its profit is
A)G + H.
B)G + J.
C)F + G + J.
D)G + H + J + K.
E)J + K.

Question

In Figure 17-4,below,initial demand,marginal cost,and marginal revenue curves (none of them shown)caused the firm to produce the profit-maximizing quantity Y₀ at a price of P₀.Now the demand and marginal cost curves have moved to those shown,with the marginal revenue curve running through point L.
Figure 17-4
 
-If the firm in Figure 17-4 above maintains its set price of P₀,its profit is
A)G + H. 
B)G + J. 
C)F + G + J. 
D)G + H + J + K. 
E)J + K.

Quizplus · Accepted Answer

The profit is calculated as the area between the price level (P₀) and the average total cost (ATC) curve, up to the quantity produced. In this case, it is represented by the area G + J.

In Figure 17-4,below,initial Demand,marginal Cost,and Marginal Revenue Curves (None of Them