Figure 4: http://tinypic.com/r/4u7ur8/6 Figure 4 shows cost and demand curves fa

Question

Figure 4: http://tinypic.com/r/4u7ur8/6

Figure 4 shows cost and demand curves facing a typical firm in a
constant-cost, perfectly competitive industry. Answer questions 30-
34 accordingly.


30) If the market price is $20, what is the average profit at the profitmaximizing quantity?
A) $5 B) $6 C) $9 D) $20

31) What is the minimum price the firm requires to produce output?
A) $20 B) $14 C) $5 D) It cannot be
determined

32) If the market price is $20, the firm's profit-maximizing output is
_____ units. At this output level, the firm

Explanation / Answer

B) $6 C) $5 A) $20 B) the average variable cost and average total cost curves shift upw ard; but marginal cost is not affected. A) increases

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