Perfectly competitive firms average fixed cost function

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Reference no: EM13771410

A perfectly competitive firms average fixed cost function is AFC = 30/Q, its average variable cost function is AVC = 6 + 0.1Q, and it marginal cost function is MC = 6 + 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the market price of the good is P = $12, then the firm will:

A. produce 30 units of output and earn a total profit of $60

B. produce 30 units of output and earn a total profit of $360

C. produce 60 units of output and suffer a total loss of $360

D. produce 60 units of output and suffer a total loss of $720

E. produce 0 units of output (shut down) and suffer a total loss of $30

Reference no: EM13771410

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