Consider the Total Cost and Revenue Curves Shown Below,for Two

question 34

Multiple Choice

Consider the total cost and revenue curves shown below,for two perfectly competitive firms,Firm A and Firm B. FIGURE 9-4
-Refer to Figure 9-4.If both Firms A and B are producing a level of output such that the slope of the TC curve is equal to the slope of the TR curve,

• A)then MC = MR and the firm is maximizing profit (or minimizing losses).
• B)then the ATC is at a minimum and the firm is maximizing profits.
• C)then both firms are suffering losses because the distance between TR and TC is the smallest.
• D)then both firms are earning positive economic profits because the distance between TR and TC is the greatest.
• E)then MC = MR but the firm may not be maximizing its profits.

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Definitions:

Commission

A fee or percentage of a sale paid to a salesperson, intermediary, or agent for their services in facilitating the transaction.

Profits

The financial gain obtained when revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Payday Loan

A type of short-term borrowing where an individual borrows a small amount at a high rate of interest, typically due on their next paycheck.

Profitable Stores

Retail outlets that generate more revenue than the expenses incurred in their operation.