An Industry Analyst Observes That in Response to a Small

question 90

Multiple Choice

An industry analyst observes that in response to a small increase in price, a competitive firm's output sometimes rises a little and sometimes a lot. The best explanation for this finding is that:

• A) the firm's marginal cost curve is random.
• B) the firm's marginal cost curve has a very small positive slope.
• C) the firm's marginal cost has a very large positive slope.
• D) the firm's marginal cost curve is horizontal for some ranges of output and rises in steps.
• E) the firm's marginal cost curve is downward sloping.

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