The Following Figure Shows Equilibrium at the Industry and Firm

question 50

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.
-In the long run, a perfectly competitive firm will produce:

• A)in the upward-sloping portion of its LRAC curve.
• B)where P = minimum AVC.
• C)in the downward-sloping portion of its LRAC curve.
• D)where P is greater than minimum ATC.
• E)where P = minimum ATC.

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Definitions:

Hawthorne Works

A factory complex where a series of studies were conducted, highlighting the impact of work conditions on employee productivity, famously known as the Hawthorne effect.

Optimum Degree

The most favorable level or degree of something for a given purpose or outcome.

Specialization

The process of focusing on a specific area of knowledge, skill, or activity, often leading to greater efficiency and expertise.

Psychological Processes

Internal mental mechanisms and structures that underlie human thinking, feeling, and behavior.