1. Refer ro diagram above: At the profit-maximizing output, total variable cost
ID: 1192599 • Letter: 1
Question
1. Refer ro diagram above: At the profit-maximizing output, total variable cost is equal to:
a. 0AHE.
b. 0CFE.
c. 0BGE.
d. ABGH.
2. True or False: Price discrimination is illegal in the United States under antitrust regulations.
3.Clear-cut mutual interdependence with respect to the price-output policies exists in:
4.Assume a purely competitive, increasing-cost industry is in long-run equilibrium. If a decline in demand occurs, firms will:
a. pure monopoly. b. oligopoly. c. monopolistic competition. d. pure competition.Explanation / Answer
1. At the profit-maximizing output, total variable cost is equal to the multiplication of AVC and quantity sold. This is given by the area enclosed by the region 0CFE.
2. True. Price discrimination is illegal in the US under Robinson-Patman Act under circumstances in which it might illegitimately make markets less competitive.
3. Clear-cut mutual interdependence with respect to the price-output policies exists in oligopoly.
4. When demand declines in a purely competitive industry, then firms leave the industry and both price and output decline.
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