Deck 9: Competitive Markets

Question 1

Which of the following statements is one of the assumptions of the theory of perfect competition?

A)Firms compete with each other by varying their price.
B)Firms are price setters.
C)Consumers know the prices charged by each firm.
D)Firms produce a wide variety of versions of the product.
E)A firm's entry to the market is regulated by the federal Competition Bureau.

Answer 1

Consumers know the prices charged by each firm.

Question 2

The demand curve facing a perfectly competitive firm

A)is the same as the industry or market demand curve.
B)is almost perfectly elastic at the market price.
C)depends on the firm's technology.
D)depends on the firm's costs of production.
E)depends on the firm's output.

Answer 2

is almost perfectly elastic at the market price.

Question 3

Given the usual assumptions about perfect competition,a perfectly competitive firm

A)can set the price it charges.
B)can sell as much of its product as it wishes at the market price.
C)can affect the market conditions in a significant way.
D)is aware of its competitors' costs.
E)competes actively with other sellers in the industry.

Answer 3

can sell as much of its product as it wishes at the market price.

Question 4

A firm in a perfectly competitive market

A)has no power to influence the market price.
B)is limited in the amount of product it can sell without affecting the price.
C)is dependant upon the behaviour of its competitors.
D)is aware of its competitors' costs.
E)competes actively with other sellers in the industry.

Question 5

Which of the following is NOT a determinant of market structure?

A)The number of sellers.
B)The nature of the product.
C)The ease of entering the industry.
D)The capital-labour ratio of the firm.
E)The market share of the sellers.

Question 6

An example of a product that could most closely satisfy the homogeneous product assumption of perfect competition is

A)barley.
B)cars.
C)shampoo.
D)personal computers.
E)pizza.

Question 7

In economics,perfect competition refers to a market structure where

A)firms behave strategically.
B)all firms are earning profits.
C)firms co-operate with each other.
D)each firm has zero market power.
E)firms can set the price of their product.

Question 8

Which of the following producers operate in a market structure closely approximated by perfect competition?

A)a restaurant in your neighbourhood
B)Air Canada
C)a Safeway grocery store
D)A British Columbia peach grower.
E)the Bank of Montreal

Question 9

In order to decide the appropriate output to produce,the manager of a perfectly competitive firm needs to know

A)the industry or market demand.
B)the industry or market supply.
C)what other firms in the industry are producing.
D)the prevailing market price for the firm's output.
E)its competitors' market strategies.

Question 10

Which of the following terms would best describe the price elasticity of demand facing a perfectly competitive firm?

A)perfectly inelastic
B)inelastic
C)unit
D)elastic
E)perfectly elastic

Question 11

Suppose XYZ Corp.is a profit-maximizing firm that is producing and selling 1 billion disposable wooden chopsticks per month at a price of $0.04 per unit.Further,suppose market demand for this product is 1.5 billion units per month.What can we conclude about market structure in this case?

A)This is not a perfectly competitive market because XYZ Corp.is small relative to the size of the industry.
B)This is not a perfectly competitive market because XYZ Corp.is selling its product at a price that is not equal to marginal cost.
C)This is a perfectly competitive market because there is freedom of entry and exit in the industry.
D)This is a perfectly competitive market because the product is homogeneous.
E)This is not a perfectly competitive market because XYZ Corp.is large relative to the size of the industry.

Question 12

The theory of perfect competition is built on several assumptions,including that

A)the individual firm can affect the price of the product it sells.
B)the individual firm can influence demand by advertising.
C)each firm must earn economic profits to remain in the industry.
D)any firm can easily enter or leave the industry.
E)there are few producers of an identical product.

Question 13

The conditions for a perfectly competitive market include which one of the following?

A)Firms behave as price takers.
B)Profits are zero in the short run.
C)New entrants cannot threaten the position of existing firms.
D)Firms can control prices.
E)Firms must employ the newest technologies as soon as they are developed.

Question 14

Which of the following statements does NOT apply to a perfectly competitive market?

A)There is freedom of entry and exit of firms in the industry.
B)Consumers can shop for the lowest available price.
C)Consumers prefer certain brands over others.
D)All firms have realized the possible economies of scale.
E)All firms in the industry are price takers.

Question 15

A firm is said to have "market power" only when

A)it has the ability to influence the price of its product.
B)it has the ability to choose its own profit-maximizing level of output.
C)its demand curve is the market demand curve.
D)it is one of 10 or fewer firms in the industry.
E)it is one of 25 or fewer firms in the industry.

Question 16

If a firm in a perfectly competitive market were to raise its price,its

A)revenue would decrease only if market demand were elastic.
B)revenue would increase only if market demand were inelastic.
C)total costs would increase.
D)revenue would fall dramatically.
E)profits would increase as long as costs remained constant.

Question 17

The term "perfect competition" refers to

A)rivalrous behaviour.
B)ideal economic behaviour.
C)a type of market structure.
D)the most prevalent market structure in a capitalist economy.
E)the most realistic market structure.

Question 18

Why will a perfectly competitive firm not sell its product below the prevailing market price?

A)It faces inelastic demand.
B)It can sell all it wishes at the market price.
C)The sellers in the market have agreed to not sell below a specified price.
D)Its costs would increase dramatically.
E)This would lead to a price war among sellers.

Question 19

The price elasticity of demand faced by an individual wheat farmer would come closest to which following value?

A)0.00007
B)0.7
C)1.0
D)71.0
E)71 000

Question 20

When economists say that a firm is a "price taker" they mean that

A)the firm initially takes price as given and tries to influence it through advertising.
B)the firm can alter its rate of production and sales without affecting the market price of the product.
C)at the price prevailing in the market,the firm will be willing to sell an infinite quantity.
D)the demand curve that the firm faces is perfectly inelastic.
E)the firm can alter the market price as it changes its rate of production.

Question 21

For any firm operating in any market structure,marginal revenue is defined as

A)total revenue divided by the number of units sold.
B)the change in total revenue resulting from the sale of an additional unit of the product.
C)the total amount received by the seller from the sale of a product.
D)the change in price resulting from the sale of an additional unit of the product.
E)price times quantity of the product sold.

Question 22

When a firm is referred to as a "price taker,"

A)the firm initially takes price as given and tries to influence it through advertising.
B)the firm can alter its rate of production and sales without affecting the market price of the product.
C)the firm will be willing to sell an infinite quantity at the market price.
D)the demand curve that the firm faces is perfectly inelastic.
E)the firm can alter the market price as it changes its rate of production.

Question 23

The market demand curve for a perfectly competitive industry is typically

A)identical to the competitive firm's demand curve.
B)downward sloping.
C)upward sloping.
D)infinitely elastic.
E)a rectangular hyperbola.

Question 24

A perfectly competitive firm's demand curve coincides with

A)its average-revenue curve and total-revenue curve.
B)its total-revenue curve.
C)both its marginal and average-revenue curves.
D)both its marginal and total-revenue curves.
E)the market demand curve.

Question 25

Average revenue (AR)for an individual firm in a perfectly competitive market equals

A)p × q.
B)(p × q)/q.
C)△p × △q.
D)△q/△p.
E)(p × q)/△q.

Question 26

When economists say that a perfectly competitive firm is a "quantity adjuster," they mean that

A)it adjusts its output in response to changes in prices.
B)it can vary its output by an infinite amount.
C)it is not concerned with cost factors.
D)its marginal-cost curve coincides with its own demand curve.
E)changing the output level does not affect the costs of production.

Question 27

Average revenue (AR)for an individual firm in a perfectly competitive market equals

A)p × q.
B)p.
C)△p × △q.
D)△q/△p.
E)(p × q)/△q.

Question 28

The perfectly elastic demand curve faced by a competitive firm means that

A)it could actually sell an infinite amount of output at the going price.
B)the firm could increase total revenue by increasing the price.
C)as the firm expands output its marginal revenue will fall.
D)total revenue is constant regardless of quantity produced.
E)the product's price will be unaffected by any realistic change in the firm's level of output.

Question 29

Firms have several different concepts of revenue: total revenue,average revenue,marginal revenue,and price.For a profit-maximizing perfectly competitive firm,which statement below is true?

A)Total revenue,average revenue,marginal revenue,and price are all equal.
B)Average revenue,marginal revenue,and price are equal.
C)Only marginal revenue and price are equal.
D)Only average revenue and price are equal.
E)None of these revenues are equal.

Question 30

Under perfect competition,the demand curve facing an individual firm is

A)the same as the industry's demand curve.
B)downward sloping.
C)upward sloping.
D)infinitely price elastic.
E)a rectangular hyperbola.

Question 31

A perfectly competitive firm's demand curve

A)has unit elasticity.
B)is identical to the market demand curve.
C)yields constant total revenues.
D)is a horizontal line where P = AR = MR.
E)is downward sloping.

Question 32

If the demand curve faced by a firm is downward sloping,we can reasonably believe that the

A)firm can influence the price of the product it sells.
B)firm will have no effect on the price of the product it sells.
C)firm must lower prices if it hopes to increase its profits.
D)firm's contributions to total output of the product is insignificant.
E)firm has no control over the price of the product it sells but can vary the output.

Question 33

For a given market price,a perfectly competitive firm's total-revenue curve

A)is a positively sloped straight line,starting from the origin.
B)increases to the right and then declines when MC = MR.
C)is a straight line that coincides with the market demand curve.
D)is the same as the firm's demand curve.
E)is the same as the firm's MR curve.

Question 34

The demand curve facing a perfectly competitive firm depends on

A)market demand alone.
B)market demand and the firm's supply curve.
C)market demand and the market supply curve.
D)market supply alone.
E)the marginal cost of the firm.

Question 35

Total revenue (TR)for an individual firm in a perfectly competitive market equals

A)p × q.
B)(p × q)/q.
C)△p × △q.
D)△q/△p.
E)△(p × q)/△q.

Question 36

Any firm's average revenue is defined as

A)total revenue divided by the number of units sold.
B)the change in total revenue resulting from the sale of an additional unit of the product.
C)the total amount received by the seller from the sale of a product.
D)the change in price resulting from the sale of an additional unit of the product.
E)price times quantity of the product sold.

Question 37

Average revenue (AR)for an individual firm in a perfectly competitive market equals

A)MR/TR.
B)MR/q.
C)MR × q.
D)MR.
E)TR/MR.

Question 38

For any firm operating in any market structure,marginal revenue (MR)equals

A)p × q.
B)(p × q)/q.
C)△p × △q.
D)△q/△p.
E)△(p × q)/△q.

Question 39

In the short run,the profit-maximizing behaviour for a price-taking firm requires it to operate where

A)P = MC,given that P is greater than or equal to ATC.
B)P = TR = TC.
C)P > MR > MC.
D)AVC = AR.
E)P = MC,given that P is greater than or equal to AVC.

Question 40

A perfectly competitive firm's total revenue is equal to which of the following?

A)average revenue multiplied by price.
B)price times quantity of the product sold,divided by quantity of the product sold.
C)the revenue received on the last unit sold.
D)marginal revenue times quantity of the product sold.
E)price multiplied by marginal revenue.

Question 41

Farmer Anna is producing tomatoes in a perfectly competitive market.In Year 1 she sells 4000 bushels of tomatoes at a price of $12.00 each.In Year 2 she sells 4800 bushels at $13.00 each.In Year 2,her average revenue is ________ and her marginal revenue is ________.

A)$13.00; $1.00
B)$12.50; $12.50
C)$13.00; $13.00
D)$12.00; $12.00
E)$12.00; $1.00

Question 42

Suppose XYZ Corp.is producing and selling disposable wooden chopsticks in a perfectly competitive market.The market price is $0.05 per unit and the firm is currently producing 600 000 units per month.What is the firm's average revenue?

A)$3000
B)$30 000
C)$0.01
D)$0.05
E)$0.10

Question 43

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.What is the marginal cost of producing the 2nd unit of output?

A)$10
B)$15
C)$5
D)$30
E)$35

Question 44

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.What is the marginal cost of producing the 5th unit of output?

A)$30
B)$35
C)$50
D)$70
E)$80

Question 45

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.The total cost of producing 6 units of output is

A)$71.67.
B)$100.
C)$230.
D)$330.
E)$430.

Question 46

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.If the firm is producing at an output level of 6 units,the ATC is ________ and the AVC is ________.

A)$55; $16.67
B)$38.33; $16.67
C)$80; $55
D)$55; $80
E)$71.67; $55

Question 47

Consider the price and quantity data below for a perfectly competitive firm producing mousetraps.
TABLE 9-1
Refer to Table 9-1.Suppose this firm is currently selling 1750 mousetraps at the market price of $5.If the firm raises its price to $6,it's average revenue will be

A)$0.
B)$5.
C)$6.
D)between $5 and $6.
E)greater than $6.

Question 48

For a given market price,a perfectly competitive firm's marginal-revenue curve

A)is a positively sloped straight line,starting from the origin.
B)increases to the right and then declines when MC = MR.
C)is a straight line that coincides with the market demand curve.
D)is the same as the firm's demand curve.
E)is the same as the firm's TR curve.

Question 49

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.At what price would a profit-maximizing firm earn zero economic profits?

A)$40
B)$70
C)$145
D)$220
E)$430

Question 50

For a given market price,a perfectly competitive firm's average-revenue curve

A)is a positively sloped straight line,starting from the origin.
B)increases to the right and then declines when MC = MR.
C)is a straight line that coincides with the market demand curve.
D)is the same as the firm's demand curve.
E)is the same as the firm's TR curve.

Question 51

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.In order to maximize its profits,the firm should continue to produce in the short run even if the market price is less than its ATC as long as the price is greater than or equal to

A)AVC.
B)MC.
C)AFC.
D)TVC.
E)TC.

Question 52

Suppose XYZ Corp.is producing and selling disposable wooden chopsticks in a perfectly competitive market.The market price is $0.04 per unit and the firm is currently producing 1 million units per month.The firm's total revenue is ________ per month.The firm's marginal revenue is ________.

A)$25 000; $0.04
B)$40 000; $0.04
C)$15 000; $0.015
D)$40 000; $0.015
E)$40 000; $0.025

Question 53

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.If the market price were $75,this perfectly competitive firm wishing to maximize its profits would

A)produce 2 units of output.
B)produce 6 units of output.
C)produce 5 units of output.
D)not produce because P < minimum of ATC.
E)not produce because P < TFC.

Question 54

Consider the price and quantity data below for a perfectly competitive firm producing mousetraps.
TABLE 9-1
Refer to Table 9-1.Suppose this firm is currently selling 1750 mousetraps at the market price of $5.If the firm raises its price to $6,its total revenue will be

A)$0.
B)greater than or equal to $1750.
C)greater than or equal to $6250.
D)$10 500.
E)greater than $10 500.

Question 55

Suppose XYZ Corp.is producing and selling disposable wooden chopsticks in a perfectly competitive market.The market price is $0.04 per unit and the firm is selling 1 million units per month.Now suppose the firm increases its stated price to $0.05 per unit.According to the theory of perfect competition,the result will be

A)total revenue for this firm will increase,but by less than $10 000 per month.
B)total revenue will increase from $40 000 to $50 000 per month.
C)total revenue will decrease from $50 000 to $40 000 per month.
D)total revenue for this firm will fall dramatically,perhaps to zero.
E)no change in the firm's total revenue.

Question 56

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.If the firm is producing at an output level of 2 units,the ATC is ________ and the AVC is ________.

A)$100; $70
B)$70; $35
C)$50; $50
D)$140; $40
E)$85; $35

Question 57

Suppose XYZ Corp.is producing and selling disposable wooden chopsticks in a perfectly competitive market.The market price is $0.05 per unit and the firm is currently producing 600 000 units per month.The firm's total revenue is ________ per month.The firm's marginal revenue is ________.

A)$30 000; $0.05
B)$12 million; $0.05
C)$1.2 million; $0.01
D)$3000; $0.50
E)$3000; $0.05

Question 58

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.This profit-maximizing firm would produce no output in the short run if the market price of its output dropped below

A)$35.
B)$40.
C)$70.
D)$90.
E)$100.

Question 59

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
Refer to Table 9-2.If the firm is producing at an output level of 4 units,the ATC is ________ and the AVC is ________.

A)$280; $180
B)$25; $45
C)$70; $45
D)$70; $35
E)$180; $100

Question 60

Consider the price and quantity data below for a perfectly competitive firm producing mousetraps.
TABLE 9-1
Refer to Table 9-1.If this firm is producing 1250 mousetraps,its total revenue is ________,its average revenue is ________ and its marginal revenue is ________.

A)$5; $5; $5
B)$6250; $250; $5
C)$1750; $250; $5
D)$5000; $5; $250
E)$6250; $5; $5

Question 61

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.What is the marginal cost of producing the 15th unit of output?

A)$0.10
B)$0.17
C)$0.375
D)$0.40
E)$0.50

Question 62

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.What is the marginal cost of producing the 35th unit of output?

A)$0.10
B)$0.17
C)$0.375
D)$0.40
E)$0.50

Question 63

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.This firm would produce no output in the short run if the market price of its output

A)dropped below $0.15.
B)dropped below $0.20.
C)dropped below $0.30.
D)dropped below $2.00.
E)dropped below $3.00.

Question 64

FIGURE 9-1
Refer to Figure 9-1.The diagram shows cost curves for a perfectly competitive firm.If the market price is P₁,the profit-maximizing firm in the short run should

A)produce output A.
B)produce output B.
C)produce output C.
D)produce output D or shut down as it doesn't really matter which.
E)definitely shut down.

Question 65

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.As this firm increases output from 40 units to 50 units per period,its marginal cost rises to

A)$0.10.
B)$0.17.
C)$0.375.
D)$0.40.
E)$0.50.

Question 66

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.Suppose the prevailing market price for this firm's product is $0.40.The profit-maximizing level of output for this firm is between

A)0 and 10 units.
B)10 and 20 units.
C)20 and 30 units.
D)30 and 40 units.
E)40 and 50 units.

Question 67

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.Suppose the prevailing market price for this firm's product is $0.45.If the firm is producing 20 units of output per period,then its profit per unit is ________ and its total profit per period is ________.

A)$9; $180
B)$0.05; $1.00
C)$6; $120
D)$0.01; $2
E)$0.40; $8

Question 68

FIGURE 9-1
Refer to Figure 9-1.The diagram shows cost curves for a perfectly competitive firm.If the market price is P₂,the profit-maximizing firm in the short run should

A)produce output B.
B)produce output C.
C)produce output D.
D)produce output E.
E)shut down,as it is incurring losses.

Question 69

FIGURE 9-1
Refer to Figure 9-1.The diagram shows cost curves for a perfectly competitive firm.If the market price is P₃,the profit-maximizing firm in the short run should

A)produce output A.
B)produce output F or shut down,as it doesn't matter which.
C)produce output D.
D)shut down because more profits could be earned in another industry.
E)produce output F.

Question 70

In the short run,a profit-maximizing firm will expand output

A)as long as marginal revenue is greater than marginal cost.
B)until marginal cost begins to rise.
C)until marginal revenue equals average variable cost.
D)until total revenue equals total cost.
E)as long as marginal cost is greater than marginal revenue.

Question 71

Suppose ABC Corp.is a firm producing newsprint in a perfectly competitive industry.Its output is 1500 tonnes per month,the marginal cost of the last tonne produced is $710,and the average revenue per tonne is $620.In the short run,this firm should

A)reduce output.
B)increase output until average revenue is equal to marginal cost.
C)increase output until marginal revenue is equal to marginal cost.
D)definitely shut down.
E)The price of the product is not known,so it is not possible to determine.

Question 72

Suppose ABC Corp.is a firm producing newsprint in a perfectly competitive industry.We have the following information about the firm's production: - output (Q)= 1500 tonnes per month
- average total cost (ATC)= $627 per tonne
- average variable cost (AVC)= $614 per tonne
- marginal revenue (MR)= $620 per tonne
- marginal cost (MC)= $620 per tonne
At the current level of output,this firm is ________ profit and is earning economic profit of ________ per month.

A)maximizing; $10 500
B)maximizing; -$10 500
C)not maximizing; -$10 500
D)not maximizing; -$9000
E)maximizing; $9000

Question 73

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.If this firm were producing at an output level of 30 units,the AFC would be ________ and the AVC would be ________.

A)$5; $6
B)$6; $5
C)$0.17; $0.20
D)$0.20; $0.17
E)$0.10; $0.30

Question 74

A firm in a perfectly competitive industry will maximize profits by adjusting

A)price until marginal revenue equals marginal cost.
B)output until marginal cost equals marginal revenue.
C)price until average revenue equals average total cost.
D)output until average revenue equals short-run average total cost.
E)average total cost until it equals price.

Question 75

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.Suppose the prevailing market price for this firm's product is $0.42 and the firm produces its profit-maximizing level of output.At this price

A)the firm is earning zero economic profits.
B)the firm is earning positive economic profits.
C)the firm is suffering economic losses and this firm will exit the industry.
D)the firm should increase output.
E)the firm should decrease output.

Question 76

Consider a perfectly competitive industry in the short-run.When a firm in this industry is at its profit-maximizing level of output,it

A)is doing as well as it can and is making a profit.
B)may be making a profit or incurring a loss.
C)is producing where P = AVC.
D)is producing where MC = AC.
E)is producing where price exceeds marginal cost.

Question 77

Consider the following total cost schedule for a perfectly competitive firm producing ball-point pens.
TABLE 9-3
Refer to Table 9-3.Suppose the prevailing market price for this firm's product is $0.14 and the firm is currently producing 20 units of output.This competitive firm wishing to maximize profits would

A)increase output because marginal revenue is greater than marginal cost.
B)decrease output because marginal revenue is less than marginal cost.
C)increase output because marginal revenue is less than marginal cost.
D)decrease output because marginal revenue is greater than marginal cost.
E)produce zero output because price is less than the minimum average variable cost.

Question 78

Suppose ABC Corp.is a firm producing newsprint in a perfectly competitive industry.We have the following information about the firm's production: - output (Q)= 1500 tonnes per month
- average total cost (ATC)= $627 per tonne
- average variable cost (AVC)= $614 per tonne
- marginal revenue (MR)= $620 per tonne
- marginal cost (MC)= $620 per tonne
In the short run,this firm should

A)reduce output because the price per tonne is less than ATC.
B)shut down because the firm is incurring economic losses.
C)maintain production at the current level.
D)increase output because MR is greater than AVC.
E)Not possible to determine because the price of the product is not known.

Question 79

FIGURE 9-1
Refer to Figure 9-1.The diagram shows cost curves for a perfectly competitive firm.The firm's short-run supply curve starts at output ________ and rises along the marginal cost (MC)curve.

A)D
B)E
C)F
D)G
E)H

Question 80

FIGURE 9-1
Refer to Figure 9-1.The diagram shows cost curves for a perfectly competitive firm.If the market price is P₄,the profit-maximizing firm in the short run should produce output

A)C.
B)F.
C)G.
D)H.
E)I.