The following graph shows the demand and cost curves of an imperfectly competitive firm. MC and ATC represent the marginal cost curve and the average cost curve respectively.Figure 9.1

-Refer to Figure 9.1. At price P₁ , the firm sells quantity Q₁, and total cost is shown by:

Question

The following graph shows the demand and cost curves of an imperfectly competitive firm. MC and ATC represent the marginal cost curve and the average cost curve respectively.Figure 9.1

-Refer to Figure 9.1. At price P₁ , the firm sells quantity Q₁, and total cost is shown by:

Quizplus · Accepted Answer

The total revenue earned by the firm at quantity Q₁ and price P₁ is shown by the rectangle ABEF. The total cost incurred by the firm at the same quantity is shown by the rectangle FECD. Therefore, the profit earned by the firm is the difference between the total revenue and total cost, which is represented by the rectangle ABED.

The Following Graph Shows the Demand and Cost Curves of an Imperfectly