Chapter 58, Problem 4MCQ

To determine

The market price of the product.

Answer to Problem 4MCQ

Option c is correct.

Explanation of Solution

Given Information:

Breakeven output level is 10 units

Total cost is $200

Explanation for correct option:

c.

Market price of the firm’s product can be determined by using following formula:

  $\begin{array}{c}\text{Market price}=\frac{\text{Total cost}}{\text{Number of output}}\\ =\frac{\$200}{10}\\ =\$20\end{array}$

Therefore, option c is also correct.

Explanation for incorrect options:

Since, it is calculation based, other options are incorrect.

Economics Concept Introduction

Perfect Competition: In perfect competition, firms are the price takers where average total cost (ATC) is minimum to the point at which MC curve cuts the MR curve.