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

question 4

Multiple Choice

Consider the following cost curves for Firm X,a perfectly competitive firm. FIGURE 9-5
-Refer to Figure 9-5.In this industry,which one of the following is FALSE?

• A)If the price were to fall below P₂,firms would leave the industry.
• B)If the price were to rise above P₂,new firms would enter the industry.
• C)If the scale of Firm X at output Q₂ and price P₂ is large enough that Firm X has an appreciable share of the market,Firm X will no longer be a price taker.
• D)At output Q₂ and price P₂,Firm X is maximizing its long-run profits.
• E)Only one firm can reach the size of output Q₂.

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Definitions:

Loaves

Typically refers to units of bread shaped and baked in specific sizes and forms but does not directly correlate to a distinct economic term.

Pounds

A unit of weight in the imperial system, equal to 16 ounces or approximately 0.453592 kilograms.

Consumer Equilibrium

A state in which a consumer has allocated their income in a way that maximizes their total utility, given the prices of goods and services.

Total Utility

The total satisfaction received from consuming a particular quantity of goods and services.