The diagram illustrates the demand curve, isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motors. Assume that...
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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?

q13.png

Select one:

a. The amount of consumer surplus is the area AEP*.

b. MQ Motors is not maximising its profits as total surplus is not being maximised.

c. Pareto efficient allocation is currently being achieved.

d. The amount of total surplus is the area ABD.

e. Deadweight loss is the loss incurred by MQ Motors for not selling more cars.

q13.png

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