Figure 14-1 The Graph Below Depicts the Cost Structure for a Firm

question 87

Multiple Choice

Figure 14-1
The graph below depicts the cost structure for a firm in a competitive market.

-Refer to Figure 14-1.When price falls from P₃ to P₁,the firm finds that

• A)fixed cost is higher at a production level of Q₁ than it is at Q₃.
• B)it should produce Q₁ units of output.
• C)it should produce Q₃ units of output.
• D)it should shut down immediately.

---

Definitions:

Limited Incomes

The situation where individuals or households have a restriction on the amount of money they receive, impacting their spending and savings behavior.

Leisure

Time spent away from work and essential activities where individuals engage in recreation or enjoyment.

Planned Economies

Economic systems where the government or a central authority makes all decisions regarding the production and distribution of goods and services, contrasting with market economies.

Problem Of Scarcity

The fundamental economic problem of having seemingly limitless human wants in a world with limited resources, leading to the necessity of making choices.