The following graph shows the demand and cost curves of an imperfectly competiti
ID: 1223102 • Letter: T
Question
The following graph shows the demand and cost curves of an imperfectly competitive firm. MC and ATC represent the marginal cost curve and the average cost curve respectively.
Figure 9.1
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Refer to Figure 9.1. At price P1 , the firm sells quantity Q1, and total cost is shown by:
the distance BC.
the rectangle ABCD.
the rectangle ABEF.
the distance AB.
the rectangle FECD.
The following graph shows the demand and cost curves of an imperfectly competitive firm. MC and ATC represent the marginal cost curve and the average cost curve respectively.
Figure 9.1
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Explanation / Answer
Option (c).
When quantity = Q1, ATC = distance EF and so, Total cost = ATC x Q = Rectangle ABEF
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