Consider the total cost and revenue curves shown below, for two perfectly competitive firms, Firm A and Firm B.
FIGURE 9- 5
-Refer to Figure 9- 5. If both Firms A and B are producing a level of output such that the slope of the TC curve is equal to the slope of the TR curve,
A) then both firms are earning positive economic profits because the distance between TR and TC is the greatest.
B) then both firms are suffering losses because the distance between TR and TC is the smallest.
C) then MC = MR and the firm is maximizing profit (or minimizing losses) .
D) then MC = MR but the firm may not be maximizing its profits.
E) then the ATC is at a minimum and the firm is maximizing profits.
Correct Answer:
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Q45: 9.3 Short-Run Decisions
Assume the following total cost
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