In a Competitive Industry, If the Marginal Cost of Factory

question 47

Multiple Choice

In a competitive industry, if the marginal cost of Factory 1 is higher than that of Factory 2, in the short run:

• A) both factories are producing too much.
• B) either Factory 1 is producing too much or Factory 2 is producing too little or both.
• C) either Factory 1 is producing too little or Factory 2 is producing too much or both.
• D) both factories are producing too little.

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Definitions:

Break-Even Point

The financial point at which total revenues equal total expenses, resulting in no profit or loss.