To maximize profits in the short run, a perfectly competitive firm will produce the output at which:
a. marginal revenue equals demand.
b. price equals marginal revenue.
c. price equals marginal cost.
d. marginal revenue equals average total cost.
e. total revenue equals total cost.
c
You might also like to view...
A perfectly competitive industry always has a perfectly elastic (flat) long-run supply curve
a. True b. False Indicate whether the statement is true or false
A 10 percent increase in the cost of restaurant meals, which are a luxury, will most likely
a. increase the purchase of meals by 10 percent. b. increase the purchase of meals by less than 10 percent. c. decrease the purchase of meals by more than 10 percent. d. decrease the purchase of meals by less than 10 percent.
Which of the following is associated with high price elasticity of demand?
a. Luxury goods b. A very short time period for consumers to respond to price changes c. Many close substitutes d. Low share in consumer's budget
Suppose that an increase in population increases demand in New Haven County's perfectly competitive market for auto repair. Which of the following is true in the short run?
a. Auto repair centers may be able to earn economic profit. b. Normal profits increase. c. The market supply curve of auto repair services shifts to the left. d. Either price or output is likely to increase, but it's impossible to say which. e. After firms have had time to adjust to the new equilibrium, the price of auto repair services will exceed the marginal cost.