QUESTION 39 This graph represents the cost and revenue curves of a firm in a per
ID: 2441254 • Letter: Q
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QUESTION 39 This graph represents the cost and revenue curves of a firm in a perfectly competitive market. MC ATC MR 03 According the graph shown, the firm's most efficient scale of operation is to produce quantity Any quantity as long as P1 is charged QUESTION 40 This graph represents the cost and revenue curves of a firm in a perfectly competitive market. MC ATC P2 01 According to the graph shown, if a firm is producing at C2 firms will not enter this market profits are being maximzed. t is producing at an afficiont scalo All of those are true. QUESTION 41 This graph shows the cost and revenue curves faced by a monopoly. MC P3 ATC PO 02 MR According to the graph shown, if Q2 units are being produced, this monopolist o is not maximizing profits. is producing where marginal costs are less than marginal revenue a oarning nogativo profits should increase production.Explanation / Answer
39. Under perfect competetion, the efficient scale of production is reached at the minimum point of ATC curve where the firm makes the optimum use of its production process. When the firm produces Q2 unit of output, it produces the most efficient quantity.
The correct answer is, Q2.
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40. When the firm is producing at the minimum point of the ATC curve, it is producing the most efficient scale of output, it is in the long run equilibrium and the firms are earning normal profits which means that the profits are maximised.
The correct answer is, All of these are true.
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41. The profit maximising condition for a monopolist is to produce at a point where its marginal revenue curve equals the marginal cost curve. When the firm is producing an output of Q2, the equality doesnot hold and the firm is not maximising profits.
So, the correct answer is, is not maximising profits.
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