The Graph Below Depicts the Cost Structure for a Firm

question 55

Multiple Choice

The graph below depicts the cost structure for a firm in a competitive market.
Figure 9-13

Refer to Figure 9-13. When price rises from P₂ to P₃, the firm finds that

• A) marginal cost exceeds marginal revenue at a production level of Q₂.
• B) if it produces at output level Q₃ it will earn a positive profit.
• C) expanding output to Q₄ would leave the firm with losses.
• D) it could increase profits by lowering output from Q₃ to Q₂.

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