Exhibit 9-21
-In Exhibit 9-21, D = AR represents the market demand curve for bicycles, MR_m represents the marginal revenue curve for a monopolist producer of bicycles and S_c = MC = AC represents the marginal cost curve for a monopolist producer of bicycles and the market supply curve when the market is perfectly competitive. The output in a competitive industry would be

Question

Exhibit 9-21

-In Exhibit 9-21, D = AR represents the market demand curve for bicycles, MR_m represents the marginal revenue curve for a monopolist producer of bicycles and S_c = MC = AC represents the marginal cost curve for a monopolist producer of bicycles and the market supply curve when the market is perfectly competitive. The output in a competitive industry would be

Quizplus · Accepted Answer

In a perfectly competitive industry, the output would be where MC=AR. Looking at the graph, we can see that this occurs at an output of 4 bicycles. Therefore, the best choice is C) 4 bicycles.

Exhibit 9-21 -In Exhibit 9-21, D = AR Represents the Market Demand