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Scenario: There are two firms producing ballpoint pens in a perfectly competitive industry. The market price of one pen is $5. Firm A has a
Scenario: There are two firms producing ballpoint pens in a perfectly competitive industry. The market price of one pen is $5. Firm A has a lower marginal cost than Firm B. The following graphs illustrate the marginal cost curves of both firms. Firm A Firm B Cost Cost MC MC 0 Quantity 0 Quantity 24) Refer to the scenario above. If both the firms are optimizing, which of the following 24) statements is true? A) Both firms will produce the same quantity. B) The quantity produced by both firms will depend on the demand for pens and not the marginal costs. C) Firm B will produce more than Firm A. D) Firm A will produce more than Firm B
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