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Output (Q)	Total Fixed Cost	Total Variable Cost
0	20	0
1	20	5
2	20	7
3	20	10
4	20	15
5	20	21

Table 9.1


Table 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3:

▸ the firm suffers a loss and is better off shutting down.

▸ the market price is greater than the minimum average variable cost.

▸ the firm suffers a loss but is better off producing the output level where MR = MC.

▸ none of the above

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Thank you for answering so quickly

Output (Q)	Total Fixed Cost	Total Variable Cost
0	20	0
1	20	5
2	20	7
3	20	10
4	20	15
5	20	21

Table 9.1


Table 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $5:

▸ the market price is lower than the average variable cost at the profit maximizing output level.

▸ the market price is lower than its marginal cost at the profit maximizing output level.

▸ the firm suffers a loss but is better off producing at the output where MR = MC.

▸ the firm suffers a loss and is better off shutting down.

Content hidden