Use graph above If the market price of the product produced

Use graph above. If the market price of the product produced in a perfectly competitive market is $15.

a. How many units will the company produce?

b. Will it be earning a profit? (yes/no answer).

c. As shown in the Exhibit, the short-run supply curve for this firm corresponds to which segment of its marginal cost curve? (indicate 2 points)

Exhibit 15 Marginal Revenue and Cost pea Unit Curves 20 MC 10 AVC 0 500 1,000 1,500 2,000 Quantity of output (units per week)

a. In perfectly competitive market MR=AR=P = $15.

So by MR=MC we get that the firm will proudce at the point D corresponding to the quantity 2000 units per week and price =$15.

b. The firm will be earning a profit because at point D the ATC curve is below the MR=MC point suggesting profit.

c. Supply curve is the part of MC above the minimum AVC. This is represented by the segment BD.