Use the Figure Below to Answer the Following Questions

question 22

Multiple Choice

Use the figure below to answer the following questions. Figure 11.4.2
-Refer to Figure 11.4.2,which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market.In the long run,market

• A)demand will increase.
• B)demand will decrease.
• C)supply will increase.
• D)supply will decrease.
• E)supply and market demand will decrease.

Understand the characteristics of competitive price-taker markets.

Identify the conditions under which a firm should continue operating or shut down in the short run.

Calculate a firm’s total revenue and total cost at its profit-maximizing level of output.

Analyze the implications of market price changes on firm’s profit-maximizing output and decision to stay in business.

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Definitions:

Net Operating Income

A company's income after subtracting operating expenses but before deducting taxes and interest charges.

Variable Selling Expense

Costs that vary directly with the level of sales, such as commissions for sales personnel, shipping charges, and promotional expenses.

Manufacturing Overhead

All indirect costs associated with the production process, including but not limited to utilities, rent, and salaries of non-direct labor.

Cash Collections

The process of gathering and managing payments received from customers or clients.