-Refer to Figure 9 -8

Multiple Choice

-Refer to Figure 9 -8. In the long run, why will the firm produce Q_f units and not Q_g units, which has a lower its average cost of production?

A) At Q_g, marginal revenue t is less than average revenue cost which will result in a loss for the firm.
B) At Q_g, average cost exceeds marginal cost so the firm will actually make a loss.
C) The firm's goal is to charge a high price and make a small profit rather than a low price and no profit.
D) Although its average cost of production is lower when the firm produces Q_g units, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss.