Price and cost (dollars) Use the following information to answer the next 4 questions: The graph below shows cost curves for a perfectly competitive firm. Suppose that the market price is $2.60. 2.60 1.60 1.50 0.80 0.70 0.60 500 800 1100 Output SMC ATC AVC Question 5 (2 points) A firm producing 800 units of output is earning the maximum amount of profit, $880. is earning the maximum amount of profit, $2,080. should instead produce 500 units of output in order to earn profits of $500. should instead produce 1100 units of output in order to earn profits of $1,100.
Price and cost (dollars) Use the following information to answer the next 4 questions: The graph below shows cost curves for a perfectly competitive firm. Suppose that the market price is $2.60. 2.60 1.60 1.50 0.80 0.70 0.60 500 800 1100 Output SMC ATC AVC Question 5 (2 points) A firm producing 800 units of output is earning the maximum amount of profit, $880. is earning the maximum amount of profit, $2,080. should instead produce 500 units of output in order to earn profits of $500. should instead produce 1100 units of output in order to earn profits of $1,100.
Chapter12: Firms In Perfectly Competitive Markets
Section: Chapter Questions
Problem 14P
Related questions
Question
![Price and cost (dollars)
Use the following information to answer the next 4 questions:
The graph below shows cost curves for a perfectly competitive firm. Suppose that
the market price is $2.60.
2.60
1.60
1.50
0.80
0.70
0.60
500
800
1100
Output
SMC
ATC
AVC
Question 5 (2 points)
A firm producing 800 units of output
is earning the maximum amount of profit, $880.
is earning the maximum amount of profit, $2,080.
should instead produce 500 units of output in order to earn profits of $500.
should instead produce 1100 units of output in order to earn profits of $1,100.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F155f73ab-1d7c-4829-acdf-a200cc7739e8%2F3e0b16bb-3d0c-40ae-a3e0-d943722b2314%2Fnol16wh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Price and cost (dollars)
Use the following information to answer the next 4 questions:
The graph below shows cost curves for a perfectly competitive firm. Suppose that
the market price is $2.60.
2.60
1.60
1.50
0.80
0.70
0.60
500
800
1100
Output
SMC
ATC
AVC
Question 5 (2 points)
A firm producing 800 units of output
is earning the maximum amount of profit, $880.
is earning the maximum amount of profit, $2,080.
should instead produce 500 units of output in order to earn profits of $500.
should instead produce 1100 units of output in order to earn profits of $1,100.
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