Scenario: the Figure Below Shows the Supply and the Demand

question 148

Multiple Choice

Scenario: The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right) . Initially, all firms in this market have identical cost curves MC₁ and ATC₁, and the market is in equilibrium at point A. Subsequently, a new production technology has been developed for this product. Some of the existing firms as well as some new firms have adopted the new technology, and their cost curves are MC₂ and ATC₂.

-Refer to the figure above.At A,the market is ________.

• A) in the long-run equilibrium, and each firm in the market earns zero economic profit
• B) in the long-run equilibrium, and each firm in the market earns positive economic profit
• C) in the short-run equilibrium, and each firm in the market earns zero economic profit
• D) in the short-run equilibrium, and each firm in the market earns positive economic profit

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Definitions:

Nonpoint Source

Pollution that does not originate from a single, identifiable source, but rather from many diffuse sources, often related to rainfall moving over and through the ground.

Crop Yield

The amount of crop (in terms of weight or volume) that is harvested per unit of land area.

Global Climate Change

Refers to the long-term alteration of temperature and typical weather patterns in a place that can lead to severe environmental and health impacts.

Nonpoint Source

Pollution that cannot be traced back to a single source or location, often resulting from runoff that collects pollutants from widespread areas.