In the graph, if the market price rose above ₹20, the equilibrium output would A U-shaped MC curve, lowest at ₹12 at 3 units, and a horizontal MR = P line at ₹20. MC equals MR at A (1 unit), where MC is falling, and at B (5 units), where MC is rising.

In the graph, if the market price rose…

In the graph, if the market price rose above ₹20, the equilibrium output would

Question 45

MediumOriginal question

In the graph, if the market price rose above ₹20, the equilibrium output would

A U-shaped MC curve, lowest at ₹12 at 3 units, and a horizontal MR = P line at ₹20. MC equals MR at A (1 unit), where MC is falling, and at B (5 units), where MC is rising.

fall below 5 unitsCorrect answerYour answerstay at 5 unitsCorrect answerYour answerrise above 5 units, along the rising MC curveCorrect answerYour answermove to point ACorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A higher MR line cuts the rising part of MC further to the right.
So the firm produces more when the price is higher.

Concept: Price rise and equilibrium output
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsProducer's equilibrium: MC = MR

Practise this chapter →

Ten questions from Revenue & Producer's Equilibrium, at your own pace.

Practise this chapter →

Ten questions from Revenue & Producer's Equilibrium, at your own pace.

In the graph, if the market price rose above ₹20, the equilibrium output would

Question 45

Explanation