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

question 33

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 its 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.

---

Definitions:

Geographical Area

A specific physical region or space defined by natural or artificial boundaries.

Administered Vertical Marketing System

A coordinated marketing channel where a single member coordinates activities, without formal agreements, to increase efficiency and effectiveness.

Contractual Agreements

Legally binding contracts or understandings between two or more parties outlining the terms and conditions of a business arrangement.

Marketing Chain

A system of intermediaries or channels through which goods and services pass from the manufacturer to the end consumer.