-In the Above Figure, at a Price of $4 Per

question 18

Multiple Choice

-In the above figure, at a price of $4 per unit, a profit- maximising perfectly competitive firm will

• A) shut down because its total revenue is less than its variable costs.
• B) incur an economic loss.
• C) produce 5 units.
• D) Both answers A and B are correct.

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Definitions:

Horizontal Price Fixing

Horizontal price fixing occurs when companies at the same level of the supply chain agree to set prices or other market conditions, reducing competition.

Grocery Stores

Retail stores that primarily sell food, including fresh produce, meats, dairy products, and various packaged goods.

Loaf of Bread

A shaped mass of baked bread, commonly sliced for consumption and made from a variety of grains.

Price Fixing

An illegal agreement among competitors to set prices at a certain level, rather than letting them fluctuate naturally with market forces.