The area under the supply curve represents _____. the fixed cost of producing the good or service the variable cost of producing the good or service the marginal value to the firm from producing the good or service the total revenue earned by the firm from selling the good or service

The area under the supply curve represents _____. the fixed cost of producing the good or service the variable cost of producing the good or service the marginal value to the firm from producing the good or service the total revenue earned by the firm from selling the good or service

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter4: Demand, Supply, And Market Equilibrium

Section: Chapter Questions

Problem 12P

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Question

The area under the supply curve represents _____.

		the fixed cost of producing the good or service
		the variable cost of producing the good or service
		the marginal value to the firm from producing the good or service
		the total revenue earned by the firm from selling the good or service

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The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry. Price (dollars) 24 10 V ATC The firm will receive $ MR Quantity/time The firm will maximize its profit at a quantity of▼ units. D Options: 6, 8, 9, or 10 After choosing the profit maximizing quantity, the firm will charge a price of in revenue at the profit-maximizing quantity. The total cost of production for this profit-maximizing quantity is $ The maximum profit the firm can earn in this situation is How will the situation change over time? Options: 6,8 10, or 24 per unit for this output. O Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost. O The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity. O This market is already in long-run equilibrium, and will not change throughout time. O Losses will induce firms to leave…
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