Use the Following Statements to Answer This Question: I

question 85

Multiple Choice

Use the following statements to answer this question: I. Under perfect competition, an upward shift in the marginal cost curve (perhaps due to a higher price for a variable input) also shifts the average variable cost curve upward.
II) Under perfect competition, an upward shift in the marginal cost curve (perhaps due to a higher price for a variable input) reduces firm output but may increase firm profits.

• A) I and II are true.
• B) I is true and II is false.
• C) II is true and I is false.
• D) I and II are false.

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Definitions:

Equilibrium Price

The price in the market where the amount of products offered matches the amount of products people want to buy.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a particular price over a specified period.

Rent Controls

Government-imposed limits on the amount landlords can charge for leasing a home or apartment.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.