Detail

As we know, a profit maximizing firm will produce where Marginal Revenue = Marginal Cost. As we also know, Marginal Revenue = Market Price for a perfectly competitive firm so the firm will produce where MC = P.

As shown in the graph below, if the price is 20, MC = P at an output of 8 so the firm will produce 8 units when the price is 20.

13. Consider the profit maximizing perfectly competitive firm shown in Figure 3. If the market price is $20 the firm will produce:

5 units. This would be correct if the price were 6, which is also the price at which the firm is indifferent between producing 6 units and shutting down in the short run since price = AVC at 6.
7 units. This would require a price of 14 and would be the long run equilibrium price and output.
8 units.
10 units. For 10 to be correct the price would have to be far higher than 20. The MC curve is so steep at this part of the graph that we can't tell what the market price would need to be but it would probably be greater than 30.
12 units. For 10 to be correct the price would have to be far higher than 20. The MC curve is so steep at this part of the graph that we can't tell what the market price would need to be but it would probably be greater than 40.