M/c question - Micro 31) Refer to Figure 14-13. When a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2, what is most likely the cause?  A. the exit of existing firms in the market  B. an increase in market supply from Supply0 to Supply1  C. the entrance of new firms into the market  D. an increase in market demand from Demand0 to Demand1 30) A profit-maximizing firm in a competitive market discovers that, at its current level of production, price is greater than marginal cost. What should it do?  A. It should increase its output.  B. It should reduce its output but continue operating.  C. It should shut down.  D. It should keep output the same.

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M/c question - Micro

31) Refer to Figure 14-13. When a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2, what is most likely the cause?

  •  A. the exit of existing firms in the market
  •  B. an increase in market supply from Supply0 to Supply1
  •  C. the entrance of new firms into the market
  •  D. an increase in market demand from Demand0 to Demand1

30) A profit-maximizing firm in a competitive market discovers that, at its current level of production, price is greater than marginal cost. What should it do?
 A. It should increase its output.
 B. It should reduce its output but continue operating.
 C. It should shut down.
 D. It should keep output the same. 

(a)
(b)
Price
Price
Supplyo
Supplys
MC
ATC
P2
P2
Po
Po
Demand,
Demand,
Quantity
Quantity
Figure 14-13
Transcribed Image Text:(a) (b) Price Price Supplyo Supplys MC ATC P2 P2 Po Po Demand, Demand, Quantity Quantity Figure 14-13
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