A textbook publisher is in monopolistic competition. The firm can sell no books at 100 a book, but for each 10 cut in price, the quantity of books it can sell increases by 20 books a day. The firm's total fixed cost is 2,400 a day.
Its average variable cost and marginal cost is a constant 20 per book. What is the firm's maximum economic profit? A) zero
B) 800
C) -400
D) 1,000
Question 2
In the above figure, which of the following statements is FALSE?
A) The total fixed cost curve is curve C.
B) Total variable cost and total cost both increase as output increases.
C) Marginal cost is equal to the slope of curve A.
D) The vertical gap between curves A and B is equal to average fixed cost.