The Diagram Below Shows the Short-Run Cost Curves for 3

question 84

Multiple Choice

The diagram below shows the short-run cost curves for 3 perfectly competitive firms in the same industry. FIGURE 9-6
-Refer to Figure 9-6.Given that Firms A,B and C are in the same industry,is this industry in long-run equilibrium?

• A)No,because Firm A is not producing at a profit-maximizing level of output.
• B)No,because if the industry were in equilibrium,all 3 firms would be earning zero economic profits.
• C)Yes,because all 3 firms are producing at their minimum average total cost.
• D)Yes,because P = MC = MR for each of the 3 firms.
• E)Yes,because each of the 3 firms is operating at its minimum efficient scale.

Identify conditions for supply and demand equilibrium in a market.

Understand the significance of the First Theorem of Welfare Economics.

Distinguish between different types of utility functions (e.g., perfect substitutes, perfect complements).

Derive conclusions about consumption and trade patterns based on utility functions.

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