The Following Figure Shows the Marginal Cost Curves of Two

question 223

Multiple Choice

The following figure shows the marginal cost curves of two profit-maximizing firms-Firm A and Firm B-in a perfectly competitive market.

-Refer to the figure above.Which of the following statements is true?

• A) Firm A produces at a lower marginal cost.
• B) For a particular market price, Firm A will enjoy a greater producer surplus.
• C) Firm B will have a higher reservation value than Firm A.
• D) The profit-maximizing level of output of Firm B will be greater than that of Firm A at all prices.

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Definitions:

Industry Expansion

The growth or increase in size and operations of an industry due to higher demand, technological advancements, or other factors.

Positive Revenues

Positive revenues refer to the income generated from sales, services, or other business activities before any expenses are subtracted, indicating a gross inflow of economic benefits.

Resources Move

Resources Move describes the reallocation or mobility of resources (labor, capital, etc.) from one sector, location, or use to another.

Alternative Production Techniques

Different methods or processes used in the production of goods and services, often evaluated for their efficiency, cost-effectiveness, or environmental impact.