The Graph Below Depicts the Cost Structure for a Firm

question 325

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 P₃ to P₄, the firm finds that

• A) fixed costs are lower at a production level of Q₄.
• B) it can earn a positive profit by increasing production to Q₄.
• C) profit is still maximized at a production level of Q₃.
• D) average revenue exceeds marginal revenue at a production level of Q₄.

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Definitions:

Id

The Id is a concept in psychoanalytic theory referring to the part of the psyche that is the source of instinctual impulses and demands for immediate satisfaction of primitive needs.

Ego

Part of Sigmund Freud's model of the psyche, the ego represents the realistic part that mediates between the desires of the id, the demands of the environment, and the moral standards of the superego.

Superego

A component of Sigmund Freud's psychoanalytic theory representing the ethical or moral self, which contains societal standards, ideals, and prohibitions.

Defence Mechanism

Psychological strategies employed by the unconscious mind to protect itself from anxiety by distorting reality.