Questions 20-22 are based on the perfectly competitive market depicted below.

20 At a market price of $\$ 54$, the area of profits or losses is
(A) $0, Y, C, D$
(B) $0, X, B, C$
(C) $X, N, A, B$
(D) $Y, X, B, C$
(E) $0, N, A, D$

21 Based on the graph, what is the total fixed cost at the profit- maximizing quantity?
(A) $\$ 54$
(B) $\$ 1,200$
(C) $\$ 2,400$
(D) $\$ 3,000$
(E) $\$ 5,400$

22 What will happen to the number of firms in the long run in this industry based on the profit conditions in this perfectly
competitive firm?
(A) The number of firms will increase as the existence of economic profits attracts more firms.
(B) The number of firms will decrease as the existence of economic profits attracts fewer firms.
(C) The number of firms will decrease as the existence of economic losses causes firms to leave
(D) The number of firms will increase as the existence of economic losses attracts more firms.
(E) The number of firms will remain unchanged as all the profits in the industry are gone.

Based on the graph, what is the total fixed cost at the profit- maximizing quantity?

Answer:

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Solution:

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