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Home Questions EGXCZBWKMA
Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Non Competitive markets

Question:

Read the following statements - Assertion (A) and Reasoning (R) in respect of the given graph:

 

 

Assertion (A): Between output levels q1 and q0, firm will be earning losses.

Reasoning (R): When total revenue is greater than total cost, losses are earned.

Options:

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is not the correct explanation of Assertion (A).

Assertion (A) is false and Reasoning (R) is false.

Assertion (A) is false but Reasoning (R) is true.

Correct Answer:

Assertion (A) is false and Reasoning (R) is false.

Explanation:

Between output levels q1 and q0, firm will be earning supernormal profits, since total revenue is greater than total cost. When total revenue is greater than total cost, profits are earned.

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