The Following Figures Show the Demand and Cost Curves of a Perfectly

question 73

Multiple Choice

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 24.7 D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
According to Figure 24.7, which of the following statements is incorrect about the price P₁?

• A)The monopolist is maximizing profit at P_1.
• B)In the long run, firms will leave the perfectly competitive industry and force the price upward.
• C)The monopolist is earning normal profit at P_1.
• D)Both the firms maximize their profits at P_{1 .}
• E)The perfectly competitive firm would produce 10 units of output at P_1.

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