Figure 7.11depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. The quantity-price combination at point E is (Q*,P*) = (32, 5,440). The average cost of producing 50 cars is the same as the average cost of producing 32. Suppose that the firm keeps the price atP= $5,440 but now produces 50 cars instead of 32.

10,000 8,000 Marginal cost Isoprofit curve: P* $63,360 Price, marginal cost ($) Isoprofit curve: $30,000 Isoprofit curve: $0 Demand curve 0 O Q* 50 100 120 Quantity of cars