A monopolistically competitive firm has the following cost structure:

OUTPUT 1 2 3 4 5 6 7

TOTAL COST 30 32 36 40 50 63 77

The firm faces the following demand curve:

PRICE $ 20 18 15 12 9 7 4

QUANTITY 1 2 3 4 5 6 7

____25.Refer to Scenario 16-3. If the government forces this firm to produce at its efficient scale, how many units will it produce and for what profit or loss?

a.

produce 3 units and make $9

b.

produce 4 units and make $6

c.

produce 5 units and lose $5

d.

produce 6 units and lose $29