The following figure shows the demand and the cost curves of a perfectly competitive firm. At the profit-maximizing output level, the firm experiences:
Figure 8.5

Question

The following figure shows the demand and the cost curves of a perfectly competitive firm. At the profit-maximizing output level, the firm experiences: ​
Figure 8.5
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Quizplus · Accepted Answer

The profit-maximizing output for a perfectly competitive firm occurs where marginal cost equals marginal revenue. In this case, it occurs at a quantity of 800 units. At that output level, the price is $8 and the average total cost is $6, resulting in a profit of ($8 - $6) x 800 = $1,600. Therefore, the answer is (C) a profit of $1,200.

The Following Figure Shows the Demand and the Cost Curves