Graph 14-6

question 91

Multiple Choice

Graph 14-6
In this graph, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Use the graph to answer the following question(s) .
-Refer to Graph 14-6. When 200 identical firms participate in this market, at what price will 25 000 units be supplied to this market?

• A) $1.00
• B) $1.25
• C) $2.00
• D) this cannot be determined from the information provided

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Definitions:

Financing Costs

Expenses incurred by a company in the process of raising funds, including interest payments, fees, and other charges.

Incremental Working Capital

The additional amount of net working capital that a company needs to invest in a project.

Opportunity Cost

The value of the best alternative that is foregone when a particular course of action is chosen.

Incremental Cash Flow

is the additional cash flow generated by a company from a new project or investment, used to analyze the profitability of taking on the new project.