Use the Figure to Answer the Following Question(s)

question 13

Multiple Choice

Use the figure to answer the following question(s) .
Figure 10-2
-What price should a competitive price-searcher firm with the cost and demand conditions depicted in Figure 10-2 charge if it wants to maximize its profit?

• A) $5
• B) $7
• C) $8
• D) $10

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Definitions:

Price Floors

are government-imposed limits on how low a price can be charged for a product, with the aim to ensure fair compensation for producers.

Price Ceilings

Price Ceilings are government-imposed limits on how high a price can be charged for a product, service, or commodity, often implemented to protect consumers from excessively high costs but can lead to shortages.

Equilibrium Price

A price where the supplied goods quantity is identical to the demanded goods quantity.

Law Of Demand

An increase in a product’s price will reduce the quantity of it demanded, and conversely for a decrease in price.