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.The firm's manager suggests that the firm's goal should be to maximise average profit.If the firm does this,what is the amount of profit that it will earn?
A) $6600
B) $6750
C) $12 150
D) $36 000

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.The firm's manager suggests that the firm's goal should be to maximise average profit.If the firm does this,what is the amount of profit that it will earn?
A) $6600 
B) $6750 
C) $12 150 
D) $36 000

Quizplus · Accepted Answer

Maximizing average profit means maximizing profit per unit, which occurs where average profit is highest. The correct choice is $6600, as it represents the maximum average profit achievable by the firm.

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