The Figure Given Below Shows Cost Curves of a Firm

question 93

Multiple Choice

The figure given below shows cost curves of a firm. Figure: 7.2
-In the figure,
|: Marginal cost curve
||: Average total cost curve
|||: Average variable cost curve
Refer to Figure 7.2.When Average Variable Cost (AVC) is at a minimum,which of the following is true?

• A)AVC equals AB
• B)Marginal cost (M
• C) equals 0G
• C)Average total cost exceeds AVC by SR
• D)MC equals HN
• E)MC equals GJ

---

Definitions:

Purely Competitive

A market structure characterized by many participants offering identical products, where no single buyer or seller can influence the market price.

Economic Profits

The excess of total revenue over total costs, including both explicit and implicit costs, as calculated in economic theory.

Normal Profits

The minimum level of profit necessary for a company to remain competitive in the market, essentially covering opportunity costs but not generating excess profit.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price-taking behavior.