Figure 7.5 Figure 7.5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 7.5.If the market price is $20,the amount of the firm's profit is -.

Question

Figure 7.5  Figure 7.5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 7.5.If the market price is $20,the amount of the firm's profit is -.

Quizplus · Accepted Answer

To determine the firm's profit, we need to find the quantity at which the marginal cost (MC) equals the market price. From the graph, we can see that this occurs at a quantity of 225 units. At this quantity, the firm's average total cost (ATC) is $15. Therefore, the firm's total revenue is $4,500 ($20 x 225), and its total cost is $3,375 ($15 x 225). Thus, the firm's profit is $1,125 ($4,500 - $3,375).

Figure 75 Figure 7