fast please 19. Refer to the diagram to the right which shows cost and demand curves facing a typical firm in aconstant−costperfectly competitive industry. If the market price is $20, what is the amount of the firm's profit?Part 2 A.$5,400 B.$6,750 C.$8,100 D.$16,200 The image depicts a graph illustrating the relationship between price/cost and quantity for a firm, with various economic curves such as Marginal Cost (MC), Average Total Cost (ATC), Average Variable Cost (AVC), and the Marginal Revenue (MR) represented.### Description of Graph Components:**Axes:**- **X-axis (Horizontal):** Represents Quantity, ranging from 0 to approximately 1,800 units.- **Y-axis (Vertical):** Represents Price and Cost, ranging from 0 to 20.**Curves:**- **MC (Marginal Cost):** A positively sloped, red-colored line demonstrating the increase in cost with each additional unit produced.- **ATC (Average Total Cost):** An upward-sloping orange line that shows the average cost per unit. This curve tends to decrease initially but rises as quantity increases.- **AVC (Average Variable Cost):** This curve is slightly below the ATC, indicating variable costs per unit, also following an upward trend after decreasing initially.- **MR (Marginal Revenue):** A horizontal pink line at the price level of $14, signifying the revenue gained from selling one more unit.**Important Points and Lines:**- **Price Line:** A constant horizontal blue line drawn at $20 showing the firm's product price level.- **Intersection Points:** - The MR cuts the MC curve at Quantity 1,100. - The MC curve intersects the AVC at Quantity 1,350. - The MC curve crosses ATC at Quantity 1,800.**Observations:**- For quantities below 1,100, the marginal cost is lower than both the price and marginal revenue, suggesting the production is profitable.- At quantity 1,100, the profit-maximizing output is where MR = MC.- Beyond quantities of 1,350, the costs begin to rise faster as indicated by MC climbing above AVC and ATC. - At 1,800 units, the MC continues to rise above both ATC and AVC, indicating higher per-unit costs which may affect profitability.This graph is typically used in microeconomics to illustrate cost structures and assist in decision-making for optimal production and pricing strategies.

A firm produces a certain quantity of goods and sells in the market for a certain price. It helps in generating a certain revenue percentage for the firm. However, the firm also required a specific cost level as well to produce that good. This is referred to as the cost, which needs to be subtracted from the revenue to generate the actual profit earned by the firm for selling that product. In the given figure, the market price is given as $20 and the quantity sold is 1350. Therefore, the total revenue earned by the firm is Now for producing 1350 unit of good, the firm had to incur a cost of Therefore, the profit earned by the firm is given as The correct option is B: $6750.

Answered: 19. Refer to the diagram to the right…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Part 2

$5,400

$6,750

$8,100

$16,200

The image depicts a graph illustrating the relationship between price/cost and quantity for a firm, with various economic curves such as Marginal Cost (MC), Average Total Cost (ATC), Average Variable Cost (AVC), and the Marginal Revenue (MR) represented.

### Description of Graph Components:

**Axes:**
- **X-axis (Horizontal):** Represents Quantity, ranging from 0 to approximately 1,800 units.
- **Y-axis (Vertical):** Represents Price and Cost, ranging from 0 to 20.

**Curves:**
- **MC (Marginal Cost):** A positively sloped, red-colored line demonstrating the increase in cost with each additional unit produced.
- **ATC (Average Total Cost):** An upward-sloping orange line that shows the average cost per unit. This curve tends to decrease initially but rises as quantity increases.
- **AVC (Average Variable Cost):** This curve is slightly below the ATC, indicating variable costs per unit, also following an upward trend after decreasing initially.
- **MR (Marginal Revenue):** A horizontal pink line at the price level of $14, signifying the revenue gained from selling one more unit.

**Important Points and Lines:**
- **Price Line:** A constant horizontal blue line drawn at $20 showing the firm's product price level.
- **Intersection Points:**
- The MR cuts the MC curve at Quantity 1,100.
- The MC curve intersects the AVC at Quantity 1,350.
- The MC curve crosses ATC at Quantity 1,800.

**Observations:**
- For quantities below 1,100, the marginal cost is lower than both the price and marginal revenue, suggesting the production is profitable.
- At quantity 1,100, the profit-maximizing output is where MR = MC.
- Beyond quantities of 1,350, the costs begin to rise faster as indicated by MC climbing above AVC and ATC.
- At 1,800 units, the MC continues to rise above both ATC and AVC, indicating higher per-unit costs which may affect profitability.

This graph is typically used in microeconomics to illustrate cost structures and assist in decision-making for optimal production and pricing strategies.

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