Figure 12-4 Figure 12-4 Shows the Cost and Demand Curves for a and Demand

question 173

Multiple Choice

Figure 12-4

Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
-Refer to Figure 12-4.If the market price is $30, should the firm represented in the diagram continue to stay in business?

• A)No, it should shut down because it is making a loss.
• B)No, it should shut down because it cannot cover its variable cost.
• C)Yes, because it is covering part of its fixed cost.
• D)Yes, because it is making a profit.