10,000 9,000 Profit = Q(P - AC) Price, marginal cost ($) 8,000 7,000 C (8, 7500) Marginal cost 6,000 A (35, 6000) Isoprofit curve: $150,000 5,000...
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Question

The diagram illustrates isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ

Motors. Which statement incorrectly describes the diagram?

q11.png

Select one:

a. An isoprofit curve traces the combinations of price and quantity that give the same profit.

b. If MQ Motors sells 40 cars at P=$4,000, it will make negative economic profit.

c. Points B and C give MQ Motors the same level of profit.

d. If MQ Motors sells 35 cars at P=$6,000, it makes profits larger than $70,000.

e. MQ Motors incurs increasing marginal cost.

q11.png

10,000
9,000
Profit = Q(P - AC)
Price, marginal cost ($)
8,000
7,000
C (8, 7500)
Marginal cost
6,000
A (35, 6000)
Isoprofit curve: $150,000
5,000
Isoprofit curve: $70,000
4,000
Zero-economic-profit curve (AC curve)
3,000
B (40, 3300)
2,000
1,000
0
10 20 30 40 50 60 70 80 90 100 110 120
Quantity of cars, Q

Top Answer

b. if MQ motors sells 40 cars... View the full answer

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