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:

Standard Deviation

A metric indicating the degree of spread or diversity among values in a dataset.

Mean

The average of a set of numbers, calculated by dividing the sum of all values by the total number of values.

Standard Normal Curve

A type of normal distribution that has a mean of 0 and a standard deviation of 1, represented graphically as a bell-shaped curve.

Area

A measure of the extent of a surface or shape, expressed in square units.