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1 markMarket Structure

CAPE Economics Unit 1 · 2006 · Paper 1 · Question 7(a)(ii)

The diagram shows cost and revenue curves (MC, ATC, AR, MR) for a perfectly competitive firm with points A, B, C, and D indicated.

Identify which intersection, A, B, C or D, indicates the output level.

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Other parts of this question

  1. 7(a)(i)State the level of output at which the firm is producing.[1 mark]
  2. 7(b)Explain whether the firm is likely to experience normal profits, economic profits, or a loss.[2 marks]
  3. 7(c)Explain what will happen to output in the long run.[2 marks]

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