Question

ATC en Price (per unit) в - Market Price P=MR В /С Quantity (units per week) Figure 23.6 Refer to Figure 23.6 for a perfectly competitive firm. Assuming that points A, B, C and D are all above AVC, this firm will maximize profits by producing the level of output that corresponds to point 11). C A) A. B) B. CC. D) D.12) Refer to Figure 23.6 for a perfectly competitive firm. If this firm produces the level of output corresponding to point B in the short run, it will earn 12) A) A loss greater than necessary. B) The maximum profit possible. C) The minimum loss possible. D) A profit, although not the maximum profit possible. Refer to Figure 23.6 for a perfectly competitive firm. Given the current market price, we expect to see 13) A) Firms exit from the industry, driving down the market price. B) Firms exit from the industry, driving up the market price. C) Firms enter the industry, driving down the market price. D) No change in the number of firms in the industry and no change in the market price.

Answer 1

11) C

Profit is maximized at MR=MC

12) A

Loss is minimized by producing at point C.

13) B

Firms will exit from the industry which increases market price.