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Take a Test-Ryan Ricer www.google.com Test.aspx?testid 168241094&centerwin; yes C secure! https://www. , ECON 206 (01): Fall 2017 Test : Exam 2 170f45(35com plete) This Question: 2 pts Revenue and cost (dollars per unit) 50 40 30 ATC AVC 20 10 0 10 20 30 40 SO Output (units per day) The above fore shows perfecty corpettve firm "the market price is $5 per untotrm OA. we stay open to produce and wil make an oconomic prof. B. we hey shut don to "inunze its losses OC willstry open to produce and will inour an economic loss O D. might shut down but more information is needed about the faed cost E. wilubay open to produce and wil make 2ero economic proet Click to seiect your answer

Explanation / Answer

a perfectly competitive firm produces where p = mc, now here the price that is charged should be at least the minimum of the average variable cost, here min of AVC is 10, thus the price of 5 isnt suitable thus firm should shut down,

SO answer is B

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