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The Following Table Gives the Average Cost of Production for Three

Question 34

Multiple Choice

The following table gives the average cost of production for three different categories of firms producing the same product.

 Type of  firme  No. of  firms  Awerane  sostper  unit  Equilibrium  output  A 350$310 units  B 400$510 units  C 550$1010 units \begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Type of } \\\text { firme }\end{array} & \begin{array} { c } \text { No. of } \\\text { firms }\end{array} & \begin{array} { c } \text { Awerane } \\\text { sostper } \\\text { unit }\end{array} & \begin{array} { c } \text { Equilibrium } \\\text { output }\end{array} \\\hline \hline \text { A } & 350 & \$ 3 & 10 \text { units } \\\text { B } & 400 & \$ 5 & 10 \text { units } \\\text { C } & 550 & \$ 10 & 10 \text { units } \\\hline\end{array}
-Refer to Table .Suppose the demand for the commodity rises from 3,200 units to 3,500 units and the market price increases to $5.Which of the following situations will be observed?


A) Type A will supply 3,200 units and earn normal profits while Type B will supply the remaining at a loss.
B) Type A and Type B firms will jointly supply 3,500 units and both will break even.
C) Type A firms will supply 3,200 units and Type B will supply the rest.
D) Type A firms will supply 3,500 units and earn supernormal profit.

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