Figure 14-2 -Refer to Figure 14-2.When Price Rises from P₃ to P4,which

question 3

Multiple Choice

Figure 14-2

-Refer to Figure 14-2.When price rises from P₃ to P4,which of the following does the firm find

• A)Profit is maximized at a production level of Q₃.
• B)Fixed costs are lower at a production level of Q₄.
• C)It can earn a positive profit by increasing production to Q₄.
• D)Average revenue exceeds marginal revenue at a production level of Q₄.

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Definitions:

AVC

Average Variable Cost, which is the total variable costs of production divided by the quantity of output produced.

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.

Average Variable Cost

The total variable costs (costs that change with the level of output) divided by the quantity of output produced.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, illustrating how fixed costs per unit change with output levels.