Refer to Figure 25

question 79

Multiple Choice

Refer to Figure 25.1 for an oligopoly firm.Assume that the existing price and quantity are $10 and 2,000 units.Which of the following statements is most likely correct?

• A)Demand curves D₁ and D₂ both assume that rivals will not match any price changes.
• B)Demand curves D₁ and D₂ both assume that rivals match any price changes.
• C)Demand curve D₁ assumes that rivals do not match price changes.
• D)Demand curve D₂ assumes that rivals do not match price changes.

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Definitions:

Average Total Costs

dividing the total production costs by the quantity of produced units gives the cost for each unit.

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a business to fully adjust to changes in market conditions.

Economic Profit

The differentiation between a business entity's gross revenue and its comprehensive costs, factoring in both explicit and implicit expenses.

Purely Competitive

Describes a market structure where many firms sell identical products, and no single seller can influence the market price.