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blakenordgaard blakenordgaard
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A year ago

Consider three firms, A, B and C, all producing kilos of potatoes (per year) in a perfectly competitive market. The diagrams below show marginal cost curves for each of the three firms.

Short description: Three graphs labelled firm A, firm B, and firm C. Long description: The first graph represents firm A. The horizontal axis representing the quantity of potatoes ranges from 200 to 700. The vertical axis representing cost in dollars ranges from 0 to 8, in increments of 2. MC subscript A passes through the following points: (200, 2), (500, 4), and (700, 6). The second graph represents firm B. The horizontal axis representing the quantity of potatoes ranges from 500 to 900. The vertical axis representing cost in dollars ranges from 0 to 8, in increments of 2. MC subscript B passes through the following points: (500, 2), (800, 4), and (900, 6). The third graph represents firm C. The horizontal axis representing the quantity of potatoes ranges from 200 to 800. The vertical axis representing cost in dollars ranges from 0 to 8, in increments of 2. The MC subscript C passes through the following points: (200, 4), (500, 6), and (800, 8).

FIGURE 12-1

Refer to Figure 12-1. Suppose each of Firms A, B and C are producing 500 kilos of potatoes. Keeping total output unchanged, what level of output should each firm be producing such that the industry is productively efficient?



▸ Firm A: 500 kilos, Firm B: 500 kilos, Firm C: 500 kilos

▸ Firm A: 500 kilos, Firm B: 200 kilos, Firm C: 200 kilos

▸ Firm A: 200 kilos, Firm B: 500 kilos, Firm C: 800 kilos

▸ Firm A: 700 kilos, Firm B: 800 kilos, Firm C: 0 kilos

▸ Firm A: 500 kilos, Firm B: 800 kilos, Firm C: 200 kilos
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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durandaldurandal
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A year ago
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blakenordgaard Author
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A year ago
This site is awesome
alpheratz
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Good timing, thanks!
SupremeDJ
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You make an excellent tutor!
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