The Following Figure Shows the Marginal Cost [MC],marginal Revenue [FH]

question 25

Multiple Choice

The following figure shows the marginal cost [MC],marginal revenue [FH] and demand [FG] curves for a monopolist who faces constant costs.
Figure 15-1
Refer to Figure 15-1.If the regulator sets a maximum price of P₂,the monopolist's demand curve is _____.

• A)P₂EG
• B)FG
• C)the marginal cost curve
• D)FH

Distinguish between short-run and long-run production periods and associated cost behaviors.

Apply the concept of minimum efficient scale in the context of firm size and cost management.

Identify the factors contributing to economies of scale and how they affect firm production and costs.

Analyze the operational and managerial challenges leading to diseconomies of scale.

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Definitions:

Marginal Cost

The charge of crafting one more unit of a product or service.

Product Markets

Markets where goods and services produced by businesses are sold to households.

Negative Externalities

These are costs that are suffered by a third party as a result of an economic transaction, which are not reflected in the market price.

Positive Externalities

Benefits that are enjoyed by a third-party or the society at large as a result of an economic transaction.