Consider Three Firms, A, B and C, All Producing Kilos

question 7

Multiple Choice

Consider three firms, A, B and C, all producing kilos of potatoes (per year) in a perfectly competitive market. The diagrams below show marginal cost curves for each of the three firms. FIGURE 12- 1
-Refer to Figure 12- 1. Suppose each of Firms A, B, and C are producing 500 kilos of potatoes. Is this industry productively efficient?

• A) It is not possible to say whether this industry is productively efficient because we do not know the market price of the product.
• B) No, because marginal costs are not equated for all firms.
• C) Yes, because output is equated for all firms.
• D) No, because the marginal cost curve for each firm has a different slope.
• E) No, because each firm could easily produce more than 500 kilos.

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Definitions:

Lever Systems

Mechanical systems comprising a lever (rigid rod) that moves around a fixed point (fulcrum) to produce movement, utilized in describing bone and muscle actions.

Applied Force

A force that is applied to an object by a person or another object.

Fulcrum

The fixed point around which a lever pivots, enabling the lever to lift or move loads with less effort.

Load

In physiology, the force or resistance that a muscle has to overcome during contraction; in engineering, the weight or force that a structure supports.