Use the Figure Below to Answer the Following Questions

question 109

Multiple Choice

Use the figure below to answer the following questions.

Figure 14.2.3
-Refer to Figure 14.2.3. Assume this firm faces demand curve D₂. At the profit-maximizing output level, the firm

• A)incurs an economic loss.
• B)makes zero economic profit.
• C)makes an economic profit.
• D)is not in a long-run equilibrium.
• E)is producing at its efficient scale.

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Definitions:

45-Degree Line

In economics, a graphical representation used in Keynesian cross diagrams, where the line represents points where aggregate expenditure equals national income.

APC

The average propensity to consume, which is the ratio of consumption spending to disposable income.

Dissaving

Occurs when individuals withdraw funds from their savings, often due to expenditures exceeding income during a specific period.

Autonomous Consumption

The level of consumption that occurs when income is zero; it is the base level of spending that must occur even if an individual has no income.