The Following Figure Shows Equilibrium at the Industry and Firm

question 24

Multiple Choice

The following figure shows equilibrium at the industry and firm level.Figure 10.6
In the figure,
S₁, S₂, S₃ are the market supply curves.D₁ and D₂ are the market demand curves.MC is the marginal cost curve of the firm.MR₁ and MR₂ are the marginal revenue curves of the firm.ATC is the average-total-cost curve of the firm.
-According to Figure 10.6, if the market price was $1.50, the individual firm would:

• A)be earning a negative economic profit of about $5.
• B)be earning a positive economic profit of about $5.
• C)be earning a positive economic profit of about $0.87.
• D)be earning a negative economic profit of about $4.50.
• E)be earning a positive economic profit of about $0.50.

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Definitions:

Diversifiable Risk

A type of risk that can be reduced or eliminated from a portfolio through the process of diversification, as it's not correlated to market risk.

Employees

Individuals who are hired by a company or organization to perform work in exchange for compensation.

Systematic Risk

The potential for loss inherent in the entire market or an entire market segment, also known as market risk or non-diversifiable risk.

Beta

A measure of a stock's volatility in relation to the overall market, indicating its risk level compared to the market average.