In the figure given below MC denotes the marginal cost and AC denotes the average cost of a firm under perfect competition.
-Refer to Figure .Suppose the demand for the commodity increases to Q₁, what will be the effect on the price level in the short run?
A) The price level will rise above $5.
B) The price level will remain at $3.
C) The price level will rise above $3 but will remain below $5.
D) The price level will rise to $5.
Correct Answer:
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