Refer to the Graph Shown

question 45

Multiple Choice

Refer to the graph shown. If suppliers can reduce output from M to L, the remaining firms in the market that are still producing L will find that their revenues will rise by:

• A) area A.
• B) area B.
• C) area A, B, and C.
• D) area A, B, and D.

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Definitions:

Profit-Maximizing

The strategy or approach adopted by a company to increase its earnings to the highest possible level.

Perfectly Competitive

A market structure where there are many buyers and sellers, all of whom have full and symmetric information, and there are no barriers to entry or exit.

Level of Output

The total quantity of goods or services produced by a firm, industry, or economy within a specific period.

Average Total Cost

The total cost of production divided by the total quantity produced.