Use the Following to Answer Questions

question 13

Multiple Choice

Use the following to answer questions :
Figure 7A-1
-Suppose a producer wants to increase production of good y from 100 to 200.Assume MP_L/MP_K and input prices remain constant.If point A in Figure 7A-1 represents the best possible combination of inputs for production of 100, which point represents the new best possible combination?

• A)Point B
• B)Point C
• C)Point D
• D)All of the above.
• E)None of the above.

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Definitions:

Average Total Cost

The total cost of production divided by the total quantity produced, indicating the cost per unit of output.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the true profitability of a firm.

Competitive Firm

A company that operates in a market where there are many buyers and sellers, and no single entity can control the prices.

Purely Competitive

An ideal market scenario where there are many sellers and buyers, each small relative to the market, products are homogeneous, and there is free entry and exit from the market.