Refer to the Accompanying Set of Graphs to Answer the Following

question 22

Multiple Choice

Refer to the accompanying set of graphs to answer the following questions.
A. D. B. E. C.
-Which graph would result in firms exiting a perfectly competitive market in the long run?

• A) A
• B) B
• C) C
• D) D
• E) E

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Definitions:

Units

A measure of quantity, often used in production and inventory to describe the number of individual items.

Step-Variable Cost

Costs that change in identifiable steps with changes in activity, increasing with each step rather than continuously.

Fixed Cost

Costs that do not vary with the level of production or sales volume, such as rent, salaries, and insurance.

Mixed Cost

A cost that contains both variable and fixed cost components, changing in total with levels of activity but not proportionately.