Figure 2 Price ATC MC AVC 0 Quantity 20. Refer to Figure 2. At the point marked

ID: 1112670 • Letter: F

Question

Figure 2 Price ATC MC AVC 0 Quantity 20. Refer to Figure 2. At the point marked e, A. price is determining production at a level where P B. Price is below average cost of production. C. price is above average cost of production. D. the leftover rectangle is the profit earned. MC. 21. Refer to Figure 2 to determine which of the following is false A. a firm should shut down if prices are below the point marked m B. a firm should continue to operate at a loss if prices are above th C. the point marked e indicates that a firm should shut down. D. Prices above e indicate would indicate profits.

Explanation / Answer

Answer
Q20
Option A
The P and MC intersects at e which is profit maximizing point for perfectly competetive firm becase the demand curve is horizontal.

Q21
Option D
The profit=(P-ATC)*Q
ar point e
P=ATC and above prcie e P>ATC so there will be profit

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Figure 2 Price ATC MC AVC 0 Quantity 20. Refer to Figure 2. At the point marked

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