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

question 11

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.Which of the following statements correctly describes the productive efficiency of this industry?

• A)The total output of 1500 kilos is the productively efficient output for this industry,so no reallocation is necessary.
• B)It is not possible to say whether this industry is productively efficient because we do not know the average costs for each firm.
• C)Productive efficiency would be achieved if Firm B produced all the output,since it has the lowest MC for the production of 500 kilos.
• D)It is possible to reduce the total cost of the given output by reallocating production among the three firms.
• E)It is not possible to say whether this industry is productively efficient because we do not know the market price of the product.

---

Definitions:

Robust

Describes something strong, healthy, or capable of withstanding tough conditions without breaking down or failing.

Dogs

Domesticated mammals known for their loyalty and companionship, belonging to the species Canis lupus familiaris.

Arguments By Elimination

A method of reasoning where all possible options are considered and systematically rejected until only one remains.

Deductive

Pertaining to the process of reasoning from one or more statements (premises) to reach a logically certain conclusion.