Figure 12-17 The Graphs in Figure 12-17 Represent the Perfectly Competitive Market

question 236

Multiple Choice

Figure 12-17

The graphs in Figure 12-17 represent the perfectly competitive market demand and supply curves for the apple industry and demand and cost curves for a typical firm in the industry.
-Refer to Figure 12-17.Which of the following statements is true?

• A)The current market price is $3 but the firm will be able to increase the price in the future.
• B)The current market price is $3 but the price will fall in the long run as a result of a decrease in demand.
• C)The current market price is $3 but the price will fall in the long run as new firms enter the market.
• D)The current market price is $3 but the price will increase in the future as the market demand increases.

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Definitions:

Marginal Utility

The additional utility or enjoyment derived from the consumption of one more unit of a product or service.

Optimal Consumption

The mix of goods and services that maximizes the utility or satisfaction of a consumer given their budget constraint.

Utility

A measure of the satisfaction, usefulness, or pleasure that individuals get from consuming goods and services.

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