Consider the Following Cost Curves for Firm X,a Perfectly Competitive

question 65

Multiple Choice

Consider the following cost curves for Firm X,a perfectly competitive firm. FIGURE 9-5
-Refer to Figure 9-5.If Firm X is producing output Q₁ and the market price is P₁,

• A)there are profits to induce increases in output by Firm X,using its existing plant.
• B)there is no lower-cost scale of plant which could be built by Firm X.
• C)Firm X is producing at its minimum efficient scale.
• D)Firm X is at its long-run profit-maximizing position.
• E)new firms have a profit incentive to enter the industry,building larger plants.

---

Definitions:

Balance Sheet Account

An account found on the balance sheet which can include assets, liabilities, and equity accounts.

Income Statement Account

An account found in the income statement that records revenues, expenses, gains, and losses.

Income Statement Columns

The segments in an income statement that organize revenues, expenses, and profitability metrics to provide insights into a company's financial performance over a specific period.

Net Income

The end profit level of a company after all financial obligations, including taxes and expenses, are reduced from its income.