FIGURE 12- 1 Consider Three Firms,A,B and C,all Producing Kilos

question 40

Multiple Choice

FIGURE 12- 1 Consider three firms,A,B and C,all producing kilos of potatoes (per year) in a perfectly competitive market.The diagrams below show marginal cost curves for each of the three firms.

-Refer to Figure 12- 1.Suppose each of Firms A,B,and C are producing 500 kilos of potatoes.Is this industry productively efficient?

• A)It is not possible to say whether this industry is productively efficient because we do not know the market price of the product.
• B)No,because marginal costs are not equated for all firms.
• C)No,because each firm could easily produce more than 500 kilos.
• D)Yes,because output is equated for all firms.
• E)No,because the marginal cost curve for each firm has a different slope.

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