The Figure Given Below Shows the Revenue and Cost Curves

question 8

Multiple Choice

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.1

-A perfectly competitive firm produces 50 units of output, at equilibrium, in the short run. The total cost borne by the firm is $300 and the average revenue is $2. Therefore, the firm:

• A)is just breaking even.
• B)is earning positive profits.
• C)is facing a positively sloped demand curve.
• D)is suffering losses.
• E)is experiencing diseconomies of scale.

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Definitions:

Total Product

The total output of goods or services produced by a firm or industry within a specified period.

Negative Marginal Returns

A situation where adding an additional factor of production results in lower output per unit.

Fixed Input

Inputs that remain constant for a period of time and do not change with the level of output.

Total Variable Cost

The sum of expenses that vary directly with the level of production, such as raw materials and direct labor.