Figure 13-17 -Refer to Figure 13-17.In the Long Run, Why Will the Run

question 160

Multiple Choice

Figure 13-17

-Refer to Figure 13-17.In the long run, why will the firm produce Qf units and not Qg units, which has a lower average cost of production?

• A)Although its average cost of production is lower when the firm produces Qg units, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss.
• B)At Qg, average cost exceeds marginal cost so the firm will actually make a loss.
• C)At Qg, marginal revenue is less than average revenue which will result in a loss for the firm.
• D)The firm's goal is to charge a high price and make a small profit rather than a low price and no profit.

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Definitions:

Production Technology

The methods, processes, and equipment used in the production of goods and services.

Market Quantity Supplied

The total amount of a specific good or service that is available for purchase in a market at a given price.

Market Supply Curve

A graphical representation showing the relationship between the price of a good and the total quantity of the good supplied by all suppliers at each price level.

Market Demand Curve

A graph showing the relationship between the price of a good or service and the quantity of that good or service that consumers are willing and able to purchase at various prices.