The Following Graph Shows the Marginal Revenue (MR), Marginal Cost

question 22

Multiple Choice

The following graph shows the marginal revenue (MR) , marginal cost (MC) , demand and average revenue (D = AR) curves for a profit-maximizing firm. Refer to the graph to answer the question. Which of the following statements is true?

• A) The firm is a price leader in this market.
• B) Firms in this market produce highly differentiated products.
• C) A small change in the marginal cost will lead to a large change in the equilibrium price.
• D) Below the market price, the demand curve is price inelastic.

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