The figure given below shows the demand and cost curves of a perfectly competitive firm. Figure: 9.4
D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
-Refer to Figure 9.4.At the profit-maximizing output level,which of the following is true?

Question

The figure given below shows the demand and cost curves of a perfectly competitive firm. Figure: 9.4  
D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
-Refer to Figure 9.4.At the profit-maximizing output level,which of the following is true?

Quizplus · Accepted Answer

The profit-maximizing output level is where marginal cost equals marginal revenue (or equivalently, the demand curve). In this case, this occurs at a quantity of 5 units. At this output level, the average total cost is $30 and the price is $20, so the firm is losing $10 per unit. Therefore, the correct answer is D, the firm is losing $10 per unit.

The Figure Given Below Shows the Demand and Cost Curves