The Diagram Below Shows the Short-Run Cost Curves for 3

question 84

Multiple Choice

The diagram below shows the short-run cost curves for 3 perfectly competitive firms in the same industry. FIGURE 9-6
-Refer to Figure 9-6.Given that Firms A,B and C are in the same industry,is this industry in long-run equilibrium?

• A)No,because Firm A is not producing at a profit-maximizing level of output.
• B)No,because if the industry were in equilibrium,all 3 firms would be earning zero economic profits.
• C)Yes,because all 3 firms are producing at their minimum average total cost.
• D)Yes,because P = MC = MR for each of the 3 firms.
• E)Yes,because each of the 3 firms is operating at its minimum efficient scale.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the quantity of goods that producers are willing to sell and the price of those goods.

Relatively Elastic

Describes a situation where the quantity demanded or supplied of a good or service changes significantly in response to a change in price.

Total Revenues

The total income generated by a company from its sales of goods or services before any expenses are subtracted.