The Figure Given Below Shows the Revenue and Cost Curves

question 94

Multiple Choice

The figure given below shows the revenue and cost curves of a monopolistically competitive firm.Figure 12.4
MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
-If firms are successful in product differentiation:

• A)their demand will become relatively elastic.
• B)consumers will believe that the firms are producing more or less identical goods.
• C)they can raise their prices without losing all of their customers to rivals.
• D)they tend to face a horizontal demand curve.
• E)they gradually emerge as price takers.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price in a given time period.

Quantity Supplied

The amount of a good or service that producers are willing to sell at a particular price.

Price Ceiling

A government-imposed limit on the price charged for a product, intended to prevent prices from rising too high.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, often due to market prices being higher.