The Following Figures Show the Demand and Cost Curves of a Perfectly

question 64

Multiple Choice

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 10.7
D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
-According to Figure 10.7,which of the following statements is incorrect about the price P₁?

• A)The monopolist is maximizing profit at P_1.
• B)In the long run,firms will leave the perfectly competitive industry and force the price upward.
• C)The monopolist is earning normal profit at P_1.
• D)Both the firms maximize their profits at P_{1 .}
• E)The perfectly competitive firm would produce 10 units of output at P_1.

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Definitions:

Solicit Capital

The act of requesting funding or investment from individuals or organizations, typically for business operations or projects.

General Supply

Refers to the overall provision or stock of resources, goods, or equipment that is available for use.

Managed by Shareholders

An organizational structure in which the owners (shareholders) of a firm take an active role in the management decisions.

Legal Entity

An organization or business that has legal rights and obligations, including the ability to enter into contracts and sue or be sued.