Consider the Following Cost Curves for Firm X, a Perfectly

question 38

Multiple Choice

Consider the following cost curves for Firm X, a perfectly competitive firm. FIGURE 9- 3
-Refer to Figure 9- 3. If Firm X is producing output Q1 and the market price is P1,

• A) there is no lower- cost scale of plant which could be built by Firm X.
• B) new firms have a profit incentive to enter the industry, building larger plants.
• C) there are profits to induce increases in output by Firm X, using its existing plant.
• D) Firm X is at its long- run profit- maximizing position.
• E) Firm X is producing at its minimum efficient scale.

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