Consider the Following Cost Curves for Two Perfectly Competitive Firms,A

question 79

Multiple Choice

Consider the following cost curves for two perfectly competitive firms,A and B.
FIGURE 9-3
-Refer to Figure 9-3.If Firm B is producing at output level q2,and selling its output at p0,then Firm B should

• A)remain at this output level because profits are maximized when SRAVC is at its minimum.
• B)expand output to q1 because profits are maximized when SRATC is at its minimum.
• C)shut down because at this price and output level the firm is suffering losses.
• D)expand output to q0 so that profits will be maximized.

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Definitions:

Interaction Effect

effect of one independent variable on the dependent variable at the different levels of another independent variable.

Main Effect

Effect of an independent variable on the dependent variable within a factorial research design.

Simple Effect

Effect of one independent variable at one of the levels of another independent variable.

Independent Variable

The factor in a study that the experimenter alters to see how it impacts the outcome variable.