Refer to Figure I. When the pnee of the food b $17S, the firm profit is $16,00.

Question

Refer to Figure I. When the pnee of the food b $17S, the firm profit is $16,00. $20,375. $25.750. $90,125 Refer to figure I. The firm will make negative profits il the price of the good is $75. $85. $95. All of the above are correct Refer to Figure 1. The firm will shut down in the short ran if the price of the good is $75 $85 $95. All of the above are correct The term refers to a firm operating In a perfectly competitive market that must take the prevailing market price for its product. price setter business entity price taker trend setter

Explanation / Answer

13

For Maximum profit MR=MC

When price of good =175, then MR=175

P=175 cuts the MC curve at quantity =515

Thus profit maximizing quantity=515 unit

Profit =Quantity*(Price-ATC)

At Q=515 unit ATC=125 unit

Thus maximum profit=515*(175-125) =$25750

Hence Option C

14

Profit will be negative when price<Minimum of ATC

Minimum ATC=$100

Thus for all price<$100, the profit will be negative

Since all the option is less than $100 a, hence at all price the profit will be negative

Option D, All of above are correct

15

Firm will shut down when Price<AVC

Minimum AVC =$80

Hence firm will shut down when price <$80

Hence Option A

16

The firm operating in perfectly competitive market are price takers

Hence Option C

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