Understanding Profit in Market Structures

What is the formula for calculating profit?

• Fixed cost plus marginal cost

• Total cost minus total revenue

• Total revenue minus total cost

• Price times quantity

In a perfectly competitive market, when is profit maximized?

• When total revenue is greater than total cost

• When average total cost equals the price

• When price is less than average total cost

• When marginal cost is minimized

What happens if the average cost is higher than the price in a perfectly competitive market?

• The firm loses money

• The firm breaks even

• The firm maximizes profit

• The firm makes a profit

What occurs when the demand curve shifts to demand prime in an inefficient market?

• Price and quantity increase

• Price and quantity remain the same

• Only price increases

• Price and quantity decrease

How is additional profit represented when the new price is higher than the average total cost?

• By the blue line

• By the green box

• By the red circle

• By the pink area