The Diagram Below Shows the Market Demand Curve and the Cost

question 72

Multiple Choice

The diagram below shows the market demand curve and the cost curves for a single firm. FIGURE 12-6
-Refer to Figure 12-6.Suppose this firm is being regulated using a policy of average-cost pricing.In this case,

• A)the result is allocatively efficient because economic profits are zero.
• B)the result is allocatively inefficient because price exceeds marginal cost.
• C)the level of output is too low,but the price is allocatively efficient.
• D)the result is as close to the competitive outcome as possible.
• E)the result is allocatively inefficient because the marginal cost curve is downward sloping.

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Definitions:

Hospital Fitness Centers

Facilities located within or associated with a hospital, offering fitness and health services to patients and sometimes the public.

Demand Curve

A chart that shows the link between the market price of a product or service and the volume demanded across a specific duration.

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A genre of fiction focused on romantic relationships between characters, often with emotionally satisfying and optimistic endings.

Quantity Demanded

The complete quantity of a good or service that individuals are prepared and financially able to buy at a certain price.