This Graph Shows the Cost Functions of Moe's Mushroom Gathering

question 29

Multiple Choice

This graph shows the cost functions of Moe's mushroom gathering business,which is perfectly competitive.
In the graph above,Average Variable Cost is labeled _____,Average Total Cost is labeled _____,and Marginal Cost is labeled ______.

• A) A;B;C
• B) C;B;A
• C) B;C;A
• D) C;A;B

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Definitions:

MR < MC

A scenario where marginal revenue is less than marginal cost, suggesting it is not profitable to produce additional units.

Marginal Cost

A measurement of the cost incurred by producing one additional unit of a product or service.

Average Variable Cost

The per-unit cost that varies, calculated through the division of total variable costs by the quantity of products made.

Economic Profits

The financial gain made in a transaction after accounting for both explicit and implicit costs.