10,000 8,000 Price, marginal cost ($) A Marginal cost B Isoprofit curve: $63,360 < Isoprofit curve: $30,000 Isoprofit curve:
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Question

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 A. Which statement correctly describes the MQ Motors' situation?

q12.png


Select one:

a. If MQ Motors chooses to operate at Point C instead of Point A, it will decrease its profits.

b. MQ Motors is maximising its profits because Point A is on the demand curve.

c. It is possible that Points C and D could give MQ Motors the same level of profits.

d. Currently, MQ Motors' MRS is equal to MRT.

e. In order to maximise profits, MQ Motors should operate at Point C.

q12.png

10,000
8,000
Price, marginal cost ($)
A
Marginal cost
B
Isoprofit curve:
$63,360
< Isoprofit curve:
$30,000
Isoprofit curve: SO
Demand curve
0
O
50
100
120
Quantity of cars, Q

Top Answer

d.Currently, MQ... View the full answer

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