To maximize profits, a competitive firm will seek to expand output until
A. Price equals marginal cost.
B. The elasticity of demand equals 1.
C. Price equals $0.
D. Total revenue equals total cost.
Answer: A
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Which of the following statements is true of a flexible exchange rate system?
A) Market forces tend to undervalue a currency over time. B) Market forces tend to overvalue a currency over time. C) Market forces do not affect exchange rates between different currencies. D) Market forces tend to push the exchange rate of a currency to market clearing levels over time.
Which of the following explains most accurately why the firm's short-run marginal cost curve will eventually rise?
a. As more of the variable factor is used, its price will rise. b. When diminishing marginal returns set in, it will take ever-larger quantities of the variable resources to produce an additional unit of output. c. As the variable factor is used more intensely, its marginal product will rise, causing an increase in marginal costs. d. As the size of the firm increases, the operational efficiency of the firm declines, causing an increase in marginal costs.
In the ordered pair (3, 6), 3 is the
a. x-coordinate. b. y-coordinate. c. origin. d. slope.
Sheila sells corn in a perfectly competitive market. This month Sheila receives a lower price for a bushel of corn than she did last month. This might have happened because:
A. the market demand increased for corn. B. the market demand decreased for corn. C. firms exited the market. D. Sheila's costs have increased.