Question

exhibit 8-3 cost per unit curves

in exhibit 8-3, if the price of the firms product is $2.00 per unit, the firm will produce:

a. 5 units per day.
b. 10 units per day.
c. 20 units per day.
d. 15 units per day.

Explanation:

Step1: Identify profit-maximizing rule

In perfect competition, a firm maximizes profit (or minimizes loss) by producing at the quantity where price ($P$) equals marginal cost ($MC$), i.e., $P=MC$.

Step2: Locate price on the graph

The given price is $\$2.00$ per unit. On the vertical axis, find this price, then trace horizontally to where it intersects the $MC$ curve.

Step3: Find corresponding quantity

The intersection of $P=\$2.00$ and the $MC$ curve is point C, which corresponds to 15 units per day on the horizontal quantity axis.

Answer:

d. 15 units per day.