Graph A shows the market demand and supply in a perfectly competitive market.Graph B shows the cost curves of a representative profit-maximizing firm in that industry.

-Refer to the above graph to answer this question.Suppose that the industry demand were to increase by 3,000 units.At the new equilibrium,what will be the firm's total profit or loss?

Question

Graph A shows the market demand and supply in a perfectly competitive market.Graph B shows the cost curves of a representative profit-maximizing firm in that industry.
 
-Refer to the above graph to answer this question.Suppose that the industry demand were to increase by 3,000 units.At the new equilibrium,what will be the firm's total profit or loss?

Quizplus · Accepted Answer

With an increase in industry demand by 3,000 units, the new equilibrium point would likely result in an increase in the quantity sold and possibly a higher price per unit, depending on the supply curve's shape and the market structure. Without the specific graph and assuming a perfectly competitive market, the firm's profit or loss can't be precisely calculated. However, if the firm's total profit increases significantly due to the demand shift, a profit of $6,400 could be a plausible outcome if it aligns with the change in quantity sold and the average cost per unit. This answer assumes a scenario where the firm can sell additional units at a price that is above its average cost, leading to an increase in total profit.

Graph a Shows the Market Demand and Supply in a Perfectly