The figure given below shows the demand and cost curves of a perfectly competitive firm. Figure: 23.4 D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
Refer to Figure 23.4.The total profit or loss for the firm is:

Question

The figure given below shows the demand and cost curves of a perfectly competitive firm. Figure: 23.4  D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
Refer to Figure 23.4.The total profit or loss for the firm is:

Quizplus · Accepted Answer

In a perfectly competitive market, the firm produces at the quantity where marginal cost equals marginal revenue, which is the intersection point of the demand and marginal cost curves in the given graph. This occurs at a quantity of 5 units, where the price is $10. At this quantity, the average total cost is $12, which is higher than the price, resulting in a loss of $2 per unit. Therefore, the total loss for the firm is $10 x $2 = $20.

The Figure Given Below Shows the Demand and Cost Curves