If a Competitive Market Has Three Firms with Marginal Costs

question 92

Multiple Choice

If a competitive market has three firms with marginal costs of MC₁ = Q₁, MC₂ = 0.50Q₂, and MC₃ = 2Q₃ and faces a market price of $10, the total quantity supplied by all three firms is:

• A)15.
• B)20.
• C)25.
• D) 35.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, providing a more accurate reflection of an economy's size and growth rate.

Average Price Level

The general level of prices for goods and services in an economy, which can be measured through indices like the Consumer Price Index (CPI).

Precautionary Demand

The demand for financial assets or goods that is motivated by the desire to protect against potential future losses.

Future Uncertainty

The inability to predict with complete confidence what is going to happen in the future, often a consideration in economic, financial, and strategic planning.