9.3  Illustrating Profit or Loss on the Cost Curve Graph 1) A firm’s total profit can be calculated as all of the following except A) total revenue minus total cost. B) average profit per unit times quantity sold. C) (price minus average total cost) times quantity sold. D) marginal profit times quantity sold. 2) If a perfectly competitive firm’s price is above its average total cost, the firm A) is earning a profit. B) should shut down. C) is incurring a loss. D) is breaking even. 3) Refer to Figure 9-3. Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. Identify the area that represents the loss. A) P2 deP1 B) P3cbP1 C) P3caP0 D) 0P1 bQ1 4) If a perfectly competitive firm’s price is less than its average total cost but greater than its average variable cost, the firm A) is earning a profit. B) should shut down. C) is incurring a loss. D) is breaking even. 5) Refer to Figure 9-4. If the market price is $30, the firm’s profit-maximizing output level is A) 0. B) 130. C) 180. D) 240. 6) Refer to Figure 9-4. If the market price is $30 and if the firm is producing output, what is the amount of its total variable cost? A) $7,200 B) $6,480 C) $5,400 D) $3,960 7) Refer to Figure 9-4. What is the amount of its total fixed cost? A) $1,080 B) $1,440 C) $2,520 D) It cannot be determined. 8) Refer to Figure 9-4.  If the market price is $30 and the firm is producing output, what is the amount of the firm’s profit or loss? A) loss of $1,080 B) profit of $1,440 C) loss of $2,520 D) profit of $1,300 9) Refer to Figure 9-4. If the market price is $30, should the firm represented in the diagram continue to stay in business? A) No, it should shut down because it is making a loss. B) No, it should shut down because it cannot cover its variable cost. C) Yes, because it is covering part of its fixed cost. D) Yes, because it is making a profit. 10) A perfectly competitive firm earns a profit when price is A) equal to minimum average total cost. B) above minimum average total cost. C) equal to minimum average variable cost. D) equal to minimum average fixed cost.