The diagram illustrates the demand curve, isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motor Assume that MQ Motors currently chooses to operate at Point E. Which statement correctly describes the market of MQ2020? 10,000 marginal cost ($) A P* = $5,440 E Marginal cost Isoprofit curve: $150,000 Isoprofit curve: $63 360

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Chapter1: Making Economics Decisions
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The diagram illustrates the demand curve, isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motors.
Assume that MQ Motors currently chooses to operate at Point E. Which statement correctly describes the market of MQ2020?
10,000
Price, marginal cost ($)
A
P = $5,440
Po
B
0
0
E
10 20 Q" = 32
D
Qo
Quantity of cars, Q
Select one:
a. Producer surplus is $63,360 as it equals MQ Motors' profits.
Marginal cost
Isoprofit curve:
$150,000
Isoprofit curve:
$63,360
Demand curve
120
O b. The amount of consumer surplus is the area ADP o.
c. The amount of total surplus is the area ABD.
Od. All possible gains from trade are being achieved as MQ Motors operates at its profit-maximising output and price.
O e. The amount of MQ Motors' producer surplus is the area BCEP*.
Transcribed Image Text:The diagram illustrates the demand curve, isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motors. Assume that MQ Motors currently chooses to operate at Point E. Which statement correctly describes the market of MQ2020? 10,000 Price, marginal cost ($) A P = $5,440 Po B 0 0 E 10 20 Q" = 32 D Qo Quantity of cars, Q Select one: a. Producer surplus is $63,360 as it equals MQ Motors' profits. Marginal cost Isoprofit curve: $150,000 Isoprofit curve: $63,360 Demand curve 120 O b. The amount of consumer surplus is the area ADP o. c. The amount of total surplus is the area ABD. Od. All possible gains from trade are being achieved as MQ Motors operates at its profit-maximising output and price. O e. The amount of MQ Motors' producer surplus is the area BCEP*.
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