The Graph Above Shows Cost Curves for a Perfectly Competitive

question 87

Multiple Choice

The graph above shows cost curves for a perfectly competitive firm.If market price is $2,how much profit will the firm earn?

• A)$600
• B)-$600
• C)zero
• D)$400

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Definitions:

Substitutes

Goods or services that can be used in place of each other; as the price of one increases, the demand for the other increases.

Price Inelastic

Describes a situation where the demand for a product does not significantly change with a change in its price.

Gasoline Demand

The total quantity of gasoline that consumers are willing and able to purchase at various prices, within a given time period.

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity of the good supplied.