Question

Question 29 1 pts Study the information located on the following graph. Using the graph select the statement that is an accurate statement? Price ATC MC AVC Po DD m 0 Q Quantity Production expansion should continue because MR is always less than MC. The profit maximizing rule is not P = MC because this is a perfectly competitive firm. The profit maximizing rule is not P = MR because this is a perfectly competitive firm. Expanding production will reduce profits to the zone where MC exceeds MR.

Answer 1

Answer option d expanding production will reduce profits to the zone where MC exceeds MR

This is an perfectly competitive market , in which equilibrium take where MC is equal to MR and beyond that MC will rise AND MR will remain same and here MC is greater than MR and leads to lower profit.

Answer D) $80

Total profit is $80

here profit take where AR is greater than AC.

AR = $12

AC = $10

Profits are $2 and here output is 40

By multiplication of profit and output we have total profit

Total profit = $2 *40

Total profit= $80