Consider the Following Short-Run Cost Curves for a Profit-Maximizing Firm

question 2

Multiple Choice

Consider the following short-run cost curves for a profit-maximizing firm in a perfectly competitive industry. FIGURE 9-2
-Refer to Figure 9-2.The short-run supply curve for the industry in which this firm operates is

• A)the MC curve at or above a price of $1.50.
• B)the AVC curve at or above a price of $1.50.
• C)the entire MC curve.
• D)the MC curve at or above a price of $3.
• E)not determinable from the information provided.

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Definitions:

External Benefits

Positive effects of a product or a decision that are enjoyed by people other than those who decide to produce or consume the product.

Allocation of Resources

The process by which resources are distributed for the production of goods and services within an economy.

Market Equilibrium

A state in a market where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price for the goods or services.