The Figure Given Below Shows the Demand and Cost Curves

question 44

Multiple Choice

The figure given below shows the demand and cost curves of a perfectly competitive firm.Figure: 10.4
D: Demand curve
MC: Marginal cost curve
ATC: Average-total cost curve
AVC: Average-variable-cost curve
-Refer to Figure 10.4. At the profit-maximizing output level, which of the following is true?

• A)The firm is making a profit of $10 per unit.
• B)The firm is making a profit of $45 per unit.
• C)The firm is losing $35 per unit.
• D)The firm is losing $10 per unit.
• E)The firm is breaking even.

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Definitions:

Product Cost

The total expense incurred in the creation of a product, including direct materials, direct labor, and overhead costs.

Period Cost

Expenses that are not directly tied to the production process and are instead expensed in the period they are incurred.

Variable Cost

Costs that change in proportion to the level of output or activity, such as materials and labor involved directly in production.

Fixed Cost

Expenses that do not change in proportion to the volume of goods or services a company produces, such as rent, salaries, and insurance premiums.