D Question 6 4 pts Use the diagram below to answer the quest

D Question 6 4 pts Use the diagram below to answer the question. If the price is P1, this company will be making: MC ATC Pt AVC P2 P4 0 10 14 24 30 40 4447 62 6668 O 47 units and realize an economic profit. O 66 units and earn only a normal profit. O 24 units and earn only a normal profit. O 47 units and break even.

Solution

6. (A) 47 units and realize an economic profit because P>ATC

7. (C) Produce 44 units and earn only a normal profit because at that point P=MC=ATC

8. (A) Shut down in short run because price P₄ is below AVC the firm is not even able to cover its variable cost.

9. (A) Marginal cost curve lying above the average variable cost curve because if the price falls below average variable cost curve firm is better off shutting down.

10. (A) summing horizontally the segment of MC curve lying above the AVC curve for all firms