-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit,the firm
A) will definitely shut down to minimize its losses.
B) will stay open to produce and will make zero economic profit.
C) will stay open to produce and will incur an economic loss.
D) will stay open to produce and will make an economic profit.
E) might shut down but more information is needed about the fixed cost.

Question

-The above figure shows a perfectly competitive firm.If the market price is more than $20 per unit,the firm
A) will definitely shut down to minimize its losses. 
B) will stay open to produce and will make zero economic profit. 
C) will stay open to produce and will incur an economic loss. 
D) will stay open to produce and will make an economic profit. 
E) might shut down but more information is needed about the fixed cost.

Quizplus · Accepted Answer

If the market price is more than $20 per unit, the firm will stay open to produce and will make an economic profit because it is covering all its variable and fixed costs and making additional revenue above those costs.

-The Above Figure Shows a Perfectly Competitive Firm