-In the Above Figure, the Total Cost of Producing the Profit

question 18

Multiple Choice

-In the above figure, the total cost of producing the profit maximizing level of output is shown by rectangle

• A) 0P1AQ1.
• B) 0P5EQ5.
• C) 0P4HQ4.
• D) 0P2BQ1.

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Definitions:

Short Run

A period in which at least one factor of production is fixed and cannot be varied by the firm.

Long Run

A period sufficient for all inputs in production to be adjusted, including physical capital and labor.

Allocative Efficiency

Allocative Efficiency occurs when resources are distributed in a way that maximizes the net benefit to society, ensuring that the right goods are produced to meet consumer preferences.

Productive Efficiency

A situation where an economy or a production process is operating in such a way that it could not produce more of one good without producing less of another.