Question

Suppose a perfectly competitive firm produces 40 units of output per-period (e.g., daily) and sells all units for the market price of $6. If average fixed cost is $2, average variable cost is $1, and marginal cost is $6, then the firm:

i. is maximizing total profit by producing and selling 40 units of output
ii. earns a per-period total profit of $120
iii. earns a per-period total profit of $240
iv. should close down in the short run and suffer a loss equal to $80

Answer 1

The correct answer for the question that is being presented above is this one: "F. i and iii" Then the firm is maximizing total profit by producing and selling 40 units of output and earns a per-period total profit of $240

Here are the choices:
A. i
B. ii
C. iii
D. iv
E. i and ii
F. i and iii