Figure 7-5 Figure 7-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 7-5.If the market price is $20,what is the average profit at the profit-maximising quantity?
A) $5
B) $6
C) $9
D) $20

Question

Figure 7-5  Figure 7-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
-Refer to Figure 7-5.If the market price is $20,what is the average profit at the profit-maximising quantity?
A) $5 
B) $6 
C) $9 
D) $20

Quizplus · Accepted Answer

The average profit is calculated as (Market Price - Average Total Cost). If the market price is $20 and the average total cost at the profit-maximizing quantity is $15, then the average profit is $5.

Figure 7-5 Figure 7-5 Shows Cost and Demand Curves