Which Statement Is True of the Graph Shown

question 55

Multiple Choice

Which statement is true of the graph shown?

• A)The marginal cost curve should not cross the AFC while it is falling.
• B)If an ATC curve was drawn in the graph it would intersect the MC curve but not any other curve.
• C)The shut down point of the firm would be at an output more than Q*.
• D)The marginal cost curve crosses the AFC curve at the lowest point of the AFC curve.

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Definitions:

Sunk Fallacy

A cognitive bias that compels people to continue investing in a project or decision based on the cumulative prior investment (time, money, resources), despite new evidence suggesting that the cost, moving forward, outweighs the expected benefit.

Endowment Effect

A cognitive bias that causes individuals to value an owned object higher than its market value.

Chronological Age

The actual age of an individual measured in years from the date of birth.

Mental Age

A concept used in intelligence testing that represents the intellectual age level an individual is functioning at, as compared to the average intellectual performance of individuals in their chronological age.