Question

Industry Firm /МC P P So ATC -P1=MR1 18 14.2 14 Po=MRo 9.6 о 10 20 24 800 900 1,000 Answer the following questions based off of the graphs above, which depict a perfectly competitive industry and firm: Suppose the industry or market is initially in equilibrium at point A Where will the firm choose to operate and what are the economic profits (losses) at that point? OQ-24; Economic profits= $4 O Q-20; Economic profits- $0 O Q=24; Economic profits- $0 O Q-20; Economic profits- $4

Answer 1

Answer
the firm produces at MC=MR at point a
where
Q=20 units, P=14=ATC
Economic profit =(P-ATC)*Q
=(14-14)*20
=0
Q=20 and Economic profit =0

option 2