Revenue and cost (dollars per unit) MC ATC 25 20 15 10 10 20 30 40 50 Ourput (ch

Question

Revenue and cost (dollars per unit) MC ATC 25 20 15 10 10 20 30 40 50 Ourput (chousands of units per year) 69-23. The above figure shows a perfectly competive firm If the market price is $15, the frm A) is incurring an economic loss B) is making an economic proft C) is making zero economic profit D) will immediately shut down. 70-24. The above figure shows a perflecty competive firm. If the market price is $10, the fim A) is incurring an economic loss. B) is making an economic proff C) is making zero economic profit D) will immediately shut down. 71-23 The above igure shows a perfectly competitive firm. If the market price is $15, how many units of output ill this firm produce to maximize profit, if profitis possible? A) 10 B) 30 C) 40 72-55.For a perfectly compettive fim, marginal revenue is A) less than the price B) greater than the price C) equal to the price D) equal to the change in profit from seling one more unit 73-29. Consumption expenditure includes spending A) on intermediate goods and services by firms B) on office supplies by firms C) by households D) by households and spending on office supplies by fims

Explanation / Answer

Question 69-23

According to the given figure, minimum ATC is $10.

If market price is greater than the minimum ATC, firm makes the economic profit.

If market price is equal to the minimum ATC, firm makes zero economic profit.

If market price is less than the minimum ATC, firm incurs an economic loss.

If market price is $15 then market price is greater than the minimum ATC.

So, the firm is making an economic profit.

The correct answer is the option (B).

Question 70-24

According to the given figure, minimum ATC is $10.

If market price is greater than the minimum ATC, firm makes the economic profit.

If market price is equal to the minimum ATC, firm makes zero economic profit.

If market price is less than the minimum ATC, firm incurs an economic loss.

If market price is $10 then market price is equal to the minimum ATC.

So, the firm is making zero economic profit.

The correct answer is the option (C).

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