The Graph Below Depicts the Cost Structure for a Firm

question 171

Multiple Choice

The graph below depicts the cost structure for a firm in a competitive market.
Figure 9-13
-Refer to Figure 9-13. When price rises from P₃ to P₄, the firm finds that

• A) fixed costs are lower at a production level of Q₄.
• B) it can earn a positive profit by increasing production to Q₄.
• C) profit is still maximized at a production level of Q₃.
• D) average revenue exceeds marginal revenue at a production level of Q₄.

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Definitions:

Merchandise Sold

Goods that have been sold and delivered to customers, generating revenue for the selling company.

Free Cash Flow

It refers to the amount of cash a company generates after accounting for capital expenditures, such as buildings or equipment. This cash can be used for expansion, dividends, or other purposes.

Cash Flows

The total amount of money being transferred in and out of a business, especially affecting liquidity.

Obsolete

Referring to a product, service, or technology that has become out of date or no longer in use.