Question

This graph shows a demand curve from point E to point S, an average cost curve labeled AC, a marginal cost curve labeled MC, and a marginal revenue curve labeled MR. Under average-cost pricing, the equilibrium price and output in the market are _____, respectively.

Price - MC MR R T S Quantity

(A) B and R

(B) A and T

(C) C and Q

(D) D and P

(E) A and Q

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Answer #1

Answer : The answer is option C.

Here MR = MC occurs at quantity level of Q where the price level is C. For monopoly the equilibrium condition is MR = MC. Hence here the equilibrium price is C and quantity is Q. Therefore, option C is correct.

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