Use the Figure to Answer the Following Question(s)

question 104

Multiple Choice

Use the figure to answer the following question(s) .
Figure 11-12

Figure 11-12 indicates the industry cost and demand conditions for a product produced in an oligopolistic industry. The price of this product is most likely to be

• A) greater than P ₂.
• B) P ₂.
• C) P ₁.
• D) in the range between P ₁ and P ₂.

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Definitions:

Marginal Cost

The increase in total cost that arises from producing an additional unit of output, reflecting the cost of producing one more unit.

Marginal Revenue

The added revenue that comes from the sale of an extra unit of a good or service.

Exiting an Industry

The process whereby businesses cease operations in a specific sector due to various reasons, such as unprofitability, strategic realignment, or market saturation.

Shutting Down

A short-term decision by a firm to halt production due to market conditions, not necessarily implying going out of business.