Homework Answers
The correct option is
- c. 40,000
The AR for the perfectly competitive firm is given as $6. Under
perfect competition, the firms faces horizontal demand curve (which
is the horiazontal AR curve), not the downward sloping demand
curve. Also, in that case, we have MR=AR, since for a constant
(given) price, for 
we have 
and 
. The profit maximization point would be where MR=MC, and we from
the given graph, we can see that MC=$6 for Q=40 units (1 unit here
is 1 thousand). Hence, the correct option would be 40,000
units.
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