A profit-maximizing firm in a competitive market is able to sell its product for $7. At its current level of output, the firm's average total cost is $10. The firm's marginal cost curve crosses its marginal revenue curve at an output level of 9 units. The firm experiences a

a. profit of more than $27.

b. profit of exactly $27.

c. loss of more than $27.

d. loss of exactly $27.

d. loss of exactly $27.

Explanation:

Under a competitive firm, a profit-maximizing firm level of output can be find out by equating the marginal revenue with its marginal cost i. e

Marginal revenue = Marginal cost

As we know that

Average total cost = Total cost : Quantity

$10 = Total cost : 9

So, the total cost is

= $10 * 9

= $90

And,

Total revenue = Price * quantity

= $7 * 9

= $63.

So,

Profit = Total revenue - total cost

= $63 - $90

= - $27

This amount comes in a negative which reflects that there is a loss of $27