Figure 3-8

question 119

Multiple Choice

Figure 3-8
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A) .If the price of oranges,a substitute for apples,decreases and the wages of apple workers increase,how will the equilibrium point change?

• A)The equilibrium point will move from A to E.
• B)The equilibrium point will move from A to B.
• C)The equilibrium point will move from A to C.
• D)The equilibrium will first move from A to B,then return to A.

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Definitions:

AVC Curve

The Average Variable Cost (AVC) Curve graphically represents how the cost per unit changes as the level of output is altered, typically showing a U-shaped curve due to economies and diseconomies of scale.

MC Curve

Marginal Cost Curve, which depicts the change in total cost that arises when the quantity produced is incremented by one unit.

AVC Curve

Stands for Average Variable Cost Curve, a graphical representation that shows the average variable costs of production at different levels of output.

ATC Curves

The graphical representation of the relationship between average total costs and output levels in the short run for a firm.