The Graph Below on the Left Shows the Short-Run Marginal

question 57

Multiple Choice

The graph below on the left shows the short-run marginal cost curve for a typical firm selling in a perfectly competitive industry.The graph on the right shows current industry demand and supply. What output should the firm produce?

• A)200
• B)250
• C)150
• D)300

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Definitions:

Error Management Theory

A theory suggesting that humans and other animals have evolved biases in judgement and decision-making processes to avoid more costly errors.

Omission Bias

The tendency to take whatever course of action does not require you to do anything (also called the default option).

Status Quo Bias

A cognitive bias favoring the existing state of affairs or the current baseline (the "status quo"), often leading to resistance against change.

Risk Aversion

A behavioral trait or tendency to avoid taking risks, preferring options that are perceived as safer or have more predictable outcomes.