Figure 6.1:
-Refer to Figure 6.1 for a perfectly competitive firm.If the market price is $20:

Question

Figure 6.1: 
-Refer to Figure 6.1 for a perfectly competitive firm.If the market price is $20:

Quizplus · Accepted Answer

At a market price of $20, the firm's marginal revenue (MR) is also $20. At the profit-maximizing output level, which is where MR equals MC, the firm should produce 17 units (intersection of MR and MC curves). However, at a price of $20, the ATC (average total cost) curve is above the price curve, indicating that the firm will incur economic losses. Thus, the best choice is B, and there are no grounds for any of the other options.

Figure 6.1: -Refer to Figure 6.1 for a Perfectly Competitive Firm.If the Competitive