Consider the Following Cost Curves for Firm X, a Perfectly

question 72

Multiple Choice

Consider the following cost curves for Firm X, a perfectly competitive firm. FIGURE 9- 3
-Refer to Figure 9- 3. In this industry, which one of the following is FALSE?

• A) If the scale of Firm X at output Q2 and price P2 is large enough that Firm X has an appreciable share of the market, Firm X will no longer be a price taker.
• B) If the price were to fall below P2, firms would leave the industry.
• C) At output Q2 and price P2, Firm X is maximizing its long- run profits.
• D) If the price were to rise above P2, new firms would enter the industry.
• E) Only one firm can reach the size of output Q2.

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Definitions:

Salvage Value

The estimated resale value of an asset at the end of its useful life.

Annual Retirement Income

The total amount of income a person receives in one year after retiring from work, which can come from pensions, savings, investments, or other sources.

After Tax

Refers to the amount of money or income that remains after all federal, state, and withholding taxes have been deducted.