Figure 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the fir s currently producing the profit maximizing output level, the firm's profit is: O A. $7,200. O B. $9,000. OC. $27,000. $36.000
Figure 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the fir s currently producing the profit maximizing output level, the firm's profit is: O A. $7,200. O B. $9,000. OC. $27,000. $36.000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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fast please 37.
![### Figure 9.1 Explanation
This graph illustrates the cost structure of a firm in a perfectly competitive market, displaying three key curves: Marginal Cost (MC), Average Total Cost (ATC), and Average Variable Cost (AVC) against the quantity produced (Q).
#### Key Components:
- **MC (Marginal Cost)**: The upward-sloping curve shows the cost of producing one additional unit of output. It intersects both the AVC and ATC curves.
- **ATC (Average Total Cost)**: This U-shaped curve indicates the total cost per unit of output, which includes both fixed and variable costs.
- **AVC (Average Variable Cost)**: Also U-shaped, this curve shows the variable cost per unit of output, excluding fixed costs.
#### Price and Output:
- Market Price: $40 (horizontal line at the 40 mark on the vertical axis)
- Profit Maximizing Output Level: Where MR (equal to market price in perfect competition) equals MC; shown at a quantity around 650 on the graph.
#### Profit Calculation:
To find the firm's profit, we analyze the difference between total revenue and total cost at the profit-maximizing output level.
- **Total Revenue (TR)**: Calculated as Price ($40) times Quantity (650).
- **Total Cost (TC)**: Calculated using the ATC at the given output level. At quantity 650, ATC is approximately $30 per unit.
\[ \text{Profit} = (\text{Price} - \text{ATC}) \times \text{Quantity} \]
\[ \text{Profit} = (40 - 30) \times 650 = 10 \times 650 = 6,500 \]
However, please verify using correct data from the graph or context for actual educational purposes, as the position and numbers may need precise confirmation from the figure.
#### Answer Choices:
A. $7,200
B. $9,000
C. $27,000
D. $36,000
According to this information, the firm's profit is calculated in context with the selected answer being closest to the calculated profit.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa72e8965-bd79-4464-a740-a72095a0be2c%2Fe5a6afc6-19f7-47be-b793-fbcab3cab609%2Fda3njte_processed.png&w=3840&q=75)
Transcribed Image Text:### Figure 9.1 Explanation
This graph illustrates the cost structure of a firm in a perfectly competitive market, displaying three key curves: Marginal Cost (MC), Average Total Cost (ATC), and Average Variable Cost (AVC) against the quantity produced (Q).
#### Key Components:
- **MC (Marginal Cost)**: The upward-sloping curve shows the cost of producing one additional unit of output. It intersects both the AVC and ATC curves.
- **ATC (Average Total Cost)**: This U-shaped curve indicates the total cost per unit of output, which includes both fixed and variable costs.
- **AVC (Average Variable Cost)**: Also U-shaped, this curve shows the variable cost per unit of output, excluding fixed costs.
#### Price and Output:
- Market Price: $40 (horizontal line at the 40 mark on the vertical axis)
- Profit Maximizing Output Level: Where MR (equal to market price in perfect competition) equals MC; shown at a quantity around 650 on the graph.
#### Profit Calculation:
To find the firm's profit, we analyze the difference between total revenue and total cost at the profit-maximizing output level.
- **Total Revenue (TR)**: Calculated as Price ($40) times Quantity (650).
- **Total Cost (TC)**: Calculated using the ATC at the given output level. At quantity 650, ATC is approximately $30 per unit.
\[ \text{Profit} = (\text{Price} - \text{ATC}) \times \text{Quantity} \]
\[ \text{Profit} = (40 - 30) \times 650 = 10 \times 650 = 6,500 \]
However, please verify using correct data from the graph or context for actual educational purposes, as the position and numbers may need precise confirmation from the figure.
#### Answer Choices:
A. $7,200
B. $9,000
C. $27,000
D. $36,000
According to this information, the firm's profit is calculated in context with the selected answer being closest to the calculated profit.
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