The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 23.5
MC: Marginal cost curve
MR: Marginal revenue curve.
ATC: Average-total-cost curve
AVC: Average-variable-cost curve
Assume the price facing the firm in Figure 23.5 is P1.Which of the following statements is true?
A) Total revenue for the firm is area 0BDQ1.
B) The firm should produce Q2.
C) Total cost for the firm is area 0P1EQ1.
D) The firm's total revenue is more than sufficient to cover its variable costs, so it should remain in operation.
E) The firm should shut down because price per unit received is less than average total cost.
Correct Answer:
Verified
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