Refer to the Following Figure

question 45

Multiple Choice

Refer to the following figure:

The graph on the left shows long-run average and marginal cost for a typical firm in a perfectly competitive industry. The graph on the right shows demand and long-run supply for an increasing-cost industry.
-If this were a constant-cost industry, what would be the price when the industry gets to long-run competitive equilibrium?

• A) between $35 and $20
• B) $35
• C) $20
• D) below $20
• E) above $35

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Definitions:

Annual Premium

The annual premium is the total amount paid for an insurance policy in a year, covering the policyholder for a specified term.

Coinsurance Clause

An insurance policy clause specifying that, if a property is not insured up to a certain percentage of its value, the owner is the bearer of part of the insurance and will not be covered for the full amount of damages.

Premium Rate

The cost of an insurance policy per unit of coverage, reflecting the likelihood of a claim being made.

Coinsurance Clause

A provision in insurance policies that requires the policyholder to bear a portion of the costs of a claim, with the insurance company paying the remainder.