Output (Q)Total Fixed CostTotal Variable Cost020012052207320104201552021Table 9.1Table 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $5:

A. the firm suffers a loss but is better off producing at the output where MR = MC.
B. the firm suffers a loss and is better off shutting down.
C. the market price is lower than its marginal cost at the profit maximizing output level.
D. the market price is lower than the average variable cost at the profit maximizing output level.


Answer: A

Economics

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