Figure 14-4

question 73

Multiple Choice

Figure 14-4
In the following figure, graph (a) depicts the linear marginal cost (MC) of a firm in a competitive market, and graph (b) depicts the linear market supply curve for a market with a fixed number of identical firms.
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-Refer to Figure 14-4. If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00?

• A)300
• B)6,000
• C)30,000
• D)60,000

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Definitions:

Specialized Machine

Equipment designed for a specific manufacturing process or product, often custom-made and representing a significant fixed cost.

Contribution Margin

The amount of revenue remaining after deducting the variable costs, indicating the contribution towards the fixed costs and profits.

Annual Production

The total quantity of goods or output produced by a company in a year.

Variable Cost

A cost that varies in direct proportion to changes in the level of production or sales volume, such as materials and labor used in production.