An Industry Analyst Observes That in Response to a Small

Multiple Choice

An industry analyst observes that in response to a small increase in price, a competitive firm's output sometimes rises a little and sometimes a lot. The best explanation for this finding is that:

A) the firm's marginal cost curve is random.
B) the firm's marginal cost curve has a very small positive slope.
C) the firm's marginal cost has a very large positive slope.
D) the firm's marginal cost curve is horizontal for some ranges of output and rises in steps.
E) the firm's marginal cost curve is downward sloping.