MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
ID: 1118885 • Letter: M
Question
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Dollars per unit of output SMC SAC S40 P-MR Figure 8.7.1 1) Refer to Figure 8.7.1 above. When market price equals so, the long run level of output will be: A)1 B) 2 943 D) 42 or 43 1) 2) 2) Refer to Figure 8.7.1 above. When market price equals $40, we can expect: A) exit of firms and a decrease in market price. B) exit of firms and an increase in market price. C) entry of firms and a decrease in market price. D) entry of firms and an increase in market price.Explanation / Answer
1)When market price=40 then quantity=q3 because profit is maximised when MR=MC
2)ans is C. When price=40 firm is making economic profit due to whoch there will be entry of new firms which will shift the supply curve right and price decreases