A graph showing demand (D

) and marginal revenue (MR

), average total cost (ATC

), average variable cost (AVC

), and short-run marginal cost (MC

), with quantity (Q

) on the horizontal axis and demand, marginal revenue, and costs in dollars on the vertical axis. D

and MR

both have vertical intercepts of $8; MR

has horizontal intercept at 80 units and D

has horizontal intercept at 160 units. At Q=45

, ATC=MR

at $3.50; at this Q,MC=$1.50,AVC=$2,D=$6

.At Q=60

, MR

, AVC

, and MC

all intersect at $2; at this Q,ATC=$3,D=$5

. At Q=75

, ATC=MC

at $3; at this Q,MR=$0.50,AVC=$2,D=$4

.At Q=80

, MC=D

at $4; at this Q,MR=$0,AVC=$2,ATC=$3

.At Q=100

, ATC=D

at $3; at this Q, AVC=$2.50

.At Q=105

, AVC=D

at $2.50; at this Q,ATC=$3.25

.

The profit-maximizing level of output is

Select one:

a.

80 units.

b.

60 units.

c.

75 units.

d.

105 units.

In the graph above, the firm will sell its output at a price of

Select one:

a.

$2.

b.

$3.

c.

$6.

d.

$5.

In the graph above, the firm will be

Select one:

a.

breaking even.

b.

earning a loss and should shut down.

c.

earning positive profit.

d.

earning a loss but should stay open.

8 SMC 6 Demand, marginal revenue, and costs 5 ATC 4 AVC 2 1 D MR Q 0 20 40 60 80 100 120 140 160 Quantity