Output (Q)Total Fixed CostTotal Variable Cost020012052207320104201552021
Table 6.1 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
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