Refer to the Provided Graph of a Competitive Market

question 49

Multiple Choice

Refer to the provided graph of a competitive market. If the output level increases from Q₂ to Q₃, then the

• A)marginal cost of the product becomes closer to its marginal benefit.
• B)marginal cost of the product increases, while its marginal benefit decreases.
• C)marginal cost of the product decreases, while its marginal benefit increases.
• D)marginal cost of the product stays constant, while its marginal benefit increases.

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Definitions:

Unit Selling Price

The amount of money charged for each individual unit of a product or service sold.

Fixed Costs

Expenses that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance.

Break-even Sales

The amount of revenue that must be generated to cover total fixed and variable costs, resulting in zero net income or loss.

Unit Selling Price

The price at which a single unit of a product is sold, determining the revenue generated from sales.