-Figure 6.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the firm is currently producing the profit maximizing output level, the firm's profit is

Question

Quizplus · Accepted Answer

At the profit-maximizing output level in a perfectly competitive market, a firm will produce where marginal cost (MC) equals market price. The area representing profit is calculated as (Price - Average Total Cost) * Quantity. Without the specific details from Figure 6.1, such as the exact quantity produced and the average total cost (ATC) at that quantity, we cannot directly calculate the profit. However, given the market price of $40 and assuming the firm is maximizing profit by producing where MC equals this price, and assuming B) $9,000 is the correct answer based on the options provided, it suggests that at the profit-maximizing output level, the difference between the price and the ATC, multiplied by the quantity, equals $9,000. This is a conceptual explanation based on the principles of economics, as the exact calculation requires details from Figure 6.1, which are not provided.

-Figure 61 Shows the Cost Structure of a Firm in a a Perfectly