A competitive firm maximizes profits by choosing the quantity at which a. average total cost is...
Question:
A competitive firm maximizes profits by choosing the quantity at which
a. average total cost is at its minimum.
b. marginal cost equals its price.
c. average total cost equals the price.
d. marginal cost equals average total cost.
Perfect Competition:
A market where many suppliers that produce similar products serve their commodities to the existing number of consumers is known as the perfect competition market. There used to be symmetric information available for both the market participants.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe correct option is b. marginal cost equals its price.
Explanation:
In the perfect competition, firms have no incentive to make changes in their...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Perfect Competition: Definition, Characteristics & Examples
from
Chapter 3 / Lesson 62
276K
Learn the definition, characteristics, and benefits of perfect competition. Review real-life examples of perfect competition between different companies.
Related to this Question
- A competitive firm maximizes profit by choosing the quantity at which a. average total cost is at its minimum. b. marginal cost equals price. c. average total cost equals the price. d. marginal cost equals average total cost.
- A competitive firm maximizes profit by choosing the quantity at which a. average total cost is at its minimum. b. marginal cost equals the price. c. average total cost equals the price. d. marginal cost equals average total cost.
- A competitive firm maximizes profit by choosing the quantity at which: a. average total cost is at its minimum. b. average total cost equals the price. c. marginal cost equals the price. d. marginal cost equals average total cost.
- A competitive firm maximizes profit by choosing the quantity at which: A. average total cost is at its minimum. B. marginal cost equals the price. C. average total cost equals the price. D. marginal
- When price and marginal cost are equal for a perfectly competitive firm, the firm is: a. Minimizing average total cost, b. Maximizing total revenue, c. Maximizing economic profit, d. Earning negative economic profit.
- In monopolistic competition, in the short run, a firm maximizes its profit by selecting an output at which marginal cost equals A. price. B. marginal revenue. C. zero. D. average total cost.
- Firms in monopolistic competition always will A. produce at the minimum average total cost. B. set their price equal to their marginal cost. C. earn an economic profit. D. set their price above their marginal cost.
- A perfectly competitive firm maximizes profits (or minimize losses) when it produces the quantity where marginal revenue equals marginal cost and the price is: A. greater than average fixed cost. B. greater than average total cost. C. greater than margina
- In the long-run, monopolistic competitive firms charge prices: a) Equal to marginal cost. b) Below marginal cost. c) Equal to the minimum of the average total cost. d) Above the minimum of the average total cost.
- Short-run profit maximization for a perfectly competitive firm occurs when firm's marginal cost equals a. average total cost. b. average variable cost c. marginal revenue. d. All of the above.
- Both a perfectly competitive firm and a monopolist a. always earn an economic profit. b. maximize profit by setting marginal cost equal to marginal revenue. c. maximize profit by setting marginal cost equal to average total cost. d. are price takers.
- Both a perfectly competitive firm and a monopolist a. always earn an economic profit. b. maximize profit by setting marginal cost equal to marginal revenue. c. maximize profit by setting marginal cost equal to the average total cost. d. are price take
- When a firm in perfect competition is maximizing profits and produces that level of output where price, marginal revenue, marginal cost, average total cost, long-run marginal cost, and long run average total cost are all equal, the firm _____. a. earns a
- In monopolistic competition, profit is maximized by producing so that marginal revenue: A) equals price. B) equals average total cost but not marginal cost. C) equals marginal cost and which are less than price. D) is negative. E) equals marginal cost and
- In the long-run, a purely competitive firm's: a. marginal revenue is equal to average revenue. b. price equals marginal cost. c. price equals minimum average total cost. d. All of the above are true.
- If a monopolistic competitor is maximizing profit, it is producing at a point where marginal cost 1. Is less than price. 2.Equals price. 3. Is greater than price. 4. Equals average total cost.
- When average total cost is at its minimum point: a. Marginal cost is also at its minimum point, b. Marginal cost is equal to zero, c. Marginal cost is constant, d. Average total cost is equal to marginal cost, e. The firm is maximizing profit.
- Short-run profit maximization for a perfectly competitive firm occurs when the firm's marginal cost equals a. average total cost. b. average variable cost. c. marginal revenue. d. All of the answers above are correct.
- Under monopolistic competition, firms operate with ______ . A. average total cost is greater than its minimum possible value B. marginal revenue equals marginal cost C. marginal revenue is greater than marginal cost D. price is greater than marginal r
- If price is less than average cost, A. the firm may still make profits as long as marginal cost is low. B. the firm's maximum profit is negative. C. there is no profit-maximizing level of output. D. marginal cost must necessarily be high.
- In the short run in perfect competition, a firm will shut down when: a. marginal revenue equals marginal cost. b. price is below average total cost. c. price is below average variable cost. d. economic profit is zero.
- In the long-run, a firm in monopolistic competition has A. a price that exceeds its average total cost. B. a marginal cost that exceeds its price. C. a price that exceeds its marginal cost. D. an average total cost that exceeds its price.
- For a perfectly competitive firm, at profit maximization a) production must occur where average cost is minimized. b) market price exceeds marginal cost. c) marginal revenue equals marginal cost.
- Monopolistic competition is inefficient because a. firms earn positive economic profits. b. the firms' marginal costs and marginal revenues are not equal. c. price is not equal to the minimum average total cost. d. entry is difficult. e. the price is
- A firm will earn normal profits when price: a. equals average total cost. b. equals average variable cost. c. equals marginal cost. d. exceeds minimum average total cost.
- The competitive firm maximizes its profit by operating at a point where ____ and price is greater than the average variable cost. A. average cost is at a minimum. B. total revenue is at a maximum. C. profit per unit is at a maximum. D. marginal cost equa
- In a perfectly competitive market, to maximize profit, the price should equal: A.Average fixed cost B. Explicit costs C. Average variable cost D. Marginal cost
- 1) A monopolistic competitor wishing to maximize profit will select a quantity where: a) Marginal revenue equals marginal cost b) Marginal cost equals demand c) Marginal cost equals average cost d) Ma
- For a monopolistically competitive firm, at the profit-maximizing quantity of output, a. price exceeds marginal cost. b. marginal revenue exceeds marginal cost. c. marginal cost exceeds average rev
- To maximize profits, a perfectly competitive firm should produce at an output up to the point where: A. The difference between price and marginal cost is at its maximum B. Total cost equals total revenue. C. Price equals marginal cost. D. Total revenue eq
- In monopolistic competition, the firm's optimal price is: A. equal to marginal revenue B. equal to marginal cost C. greater than marginal cost D. less than marginal cost
- Every firm maximizes profit where: a. average revenue equals average total cost. b. average revenue equals average variable cost. c. total revenue equals total cost. d. marginal revenue exceeds the marginal cost by the greatest amount. e. marginal re
- The profit-maximizing level of output for a perfectly competitive firm occurs where: a. marginal revenue equals price. b. marginal revenue equals marginal cost. c. total revenue equals total cost. d. average revenue equals average variable cost.
- The competitive firm maximizes profit when it produces output up to the point where - price equals average variable cost. - marginal revenue equals total revenue. - marginal cost equals marginal revenue. - marginal revenue equals average revenue.
- Which of the following is not true for monopolistically competitive firms in the long run? A. Economic profit equals zero. B. Price equals average total cost. C. Average total cost is minimized. D. Marginal revenue equals marginal cost. E. Price exce
- When a competitive firm makes a decision to shut down, it is most likely that: a. marginal cost is above average variable cost. b. marginal cost is above average total cost. c. price is below the minimum of average variable cost. d. fixed costs exceed var
- if price=marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit, then the price exceeds avg. total cost. Can you explain why?
- A perfectly competitive firm earns a profit when price is: a. equal to minimum average fixed costs b. equal to minimum average variable cost c. above minimum average total cost d. equal to minimum ave
- For a competitive firm, the price at every level of output equals: marginal cost. average profit. marginal revenue. average cost.
- For a monopolist that is maximizing profits, A. price equals average total cost. B. price equals marginal revenue. C. marginal revenue exceeds price. D. price exceeds marginal cost.
- At the profit-maximizing output in a monopoly-controlled market, the price a monopolist charges is: -below marginal cost -above marginal cost -above average total cost -below average total cost -e
- To determine its output quantity, the firm in perfect competition sets: a. marginal cost equal to marginal revenue. b. marginal cost equal to average total cost. c. price equal to marginal cost. d
- When a perfectly competitive firm is in long-run equilibrium, it is allocatively efficient because the: A. price equals the average total cost B. price equals the average variable cost C. price equals zero D. price equals marginal cost
- When a perfectly competitive firm is in long-run equilibrium, it is allocatively efficient because the a) price equals average total cost. b) price equals average variable cost. c) price equals zero. d) price equals marginal cost.
- If a profit-maximizing firm in a perfectly competitive market is making an economic profit, then it must be producing a level of output where: A) marginal cost is greater than average total cost. B) marginal cost is greater than marginal revenue. C) price
- 1. For any firm, whether it is a price taker or a price maker, profit maximization occurs at a rate of output for which a. marginal revenue equals marginal cost b. average total cost is minimized c. m
- A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of output in the short run if its price is: A. greater than marginal cost. B. less than marginal cost. C. less than average variable cost. D. greate
- Under both perfect competition and monopoly, a firm a. is a price taker. b. is a price maker. c. will shut down in the short run if price falls short of average total cost. d. always earns a pure economic profit. e. sets marginal cost equal to marginal re
- A perfectly competitive firm maximizes profit when: a. its marginal cost is minimum b. its marginal cost is greater than its marginal revenue c. its marginal revenue is equal to its marginal cost d. its marginal cost is negative e. its marginal revenue is
- 1. A monopolistic competitor wishing to maximize profit will select a quantity where: a. marginal revenue equals average cost b. marginal cost equals demand c. marginal revenue equals marginal cost
- In perfect competition, a firm maximizing its profits will set its output at that level where a. Average variable cost = price b. Marginal cost = price c. Total cost = price d. Average fixed cost = price
- In the long run, a monopolistically competitive firm's price equals its A. marginal cost but not its average total cost. B. average total cost and its marginal cost. C. average total cost but not its marginal cost. D. neither marginal cost nor its average
- In the long run, in monopolistic competition, a. the demand curve is tangent to the marginal cost curve. b. price equals marginal cost. c. price equals minimum average total cost. d. firms have an incentive to leave. e. economic profits are zero.
- For a firm in monopolistic competition, the marginal cost curve intersects the average total cost curve A. at no point. B. at the minimum average total cost. C. to the left of the minimum average total cost. D. to the right of the minimum average total co
- In a perfectly competitive market: the market price is 22 Marginal cost (MC) = 2(Q) + 8 average total cost at equilibrium is 28, and average variable cost at equilibrium is 10. 1: The profit maximizing price is: 22 2: The profit maximizing quantity is:7 3
- A firm's markup is: A) the amount by which price equals marginal cost. B) the amount by which price exceeds marginal cost. C) the firm's total cost. D) the firm's total profit. E) the amount by which price is less than marginal cost.
- In long-run equilibrium, for each identical firm in a perfectly competitive industry: a. marginal cost = price b. marginal cost = average total cost c. profit = 0 d. all of the above are true
- For the perfectly competitive firm, the profit-maximizing decision to shut down is made when the price: A. falls below minimum average total cost. B. is greater than minimum average variable cost, but lower than minimum average total cost. C. falls below
- For any firm in any market, the profit-maximizing level of output is always at the point where: a) marginal revenue equals average variable cost. b) average total cost equals marginal revenue. c) average total cost equals marginal cost. d) marginal re
- To maximize profit, a natural monopolist produces the level of output at which: a. marginal cost equals the minimum of the long-run average total cost. b. price equals average total cost. c. marginal revenue equals marginal cost. d. all of the above
- A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has a price of $10, an average total cost of $8, and a fixed cost of $200. Given this, profit is, marginal cost is, and the average variable cost is. a. 0, $8,
- A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has a price of $10, an average total cost of $8, and a fixed cost of $200. Given this, the profit is, the marginal cost is, and the average variable cost is. a
- According to economic theory, profits are maximized where: a. total revenue equals total cost. b. marginal revenue equals marginal cost. c. price and average cost are equal. d. where marginal product and average cost are equal.
- A perfectly competitive firm should shut down in the short run if price falls below the minimum of: A) average variable costs. B) marginal revenue. C) average total cost. D) fixed costs. E) marginal cost.
- A perfectly competitive firm's marginal cost is $5, average variable cost is $3, and marginal revenue is $5. To maximize profits (or minimize losses), the firm should NOT: a) shut down b) lower the qu
- A monopolistic competitor is producing a level of output at which price is $200, marginal revenue is $100, average total cost is $210, marginal cost is $100, and average variable cost is $180. In order to maximize profit, the firm should increase a. out
- For a monopolistically competitive firm in long-run equilibrium: a. price will equal marginal cost. b. price will equal average total cost. c. marginal revenue will exceed marginal cost. d. economic p
- A perfectly competitive firm is is currently producing at a point at which price is $10 and both marginal cost and average variable cost are $7. To maximize profit or minimize loss in the short run, this firm should do what?
- At the profit-maximizing level of output for a perfectly competitive firm, a. marginal revenue equals average total cost. b. marginal revenue equals average variable cost. c. marginal revenue equals marginal cost. d. average revenue equals average cost.
- For any firm in any market, the profit-maximizing level of output is always at the point where: a. Marginal revenue equals average variable cost, b. Average total cost equals marginal revenue, c. Average total cost equals marginal cost, d. Marginal
- The perfectly competitive firm will seek to produce the level of output for which: A. average total cost is at a minimum. B. average fixed cost is at a minimum. C. marginal cost equals marginal revenue. D. average variable cost is at a minimum.
- A perfectly competitive firm will maximize profit when the quantity produced is such that the: A) price exceeds the firm's marginal cost by as much as possible. B) firm's marginal revenue is equal to the price. C) firm's marginal revenue is equal to its m
- In the monopolistic competition model, a firm is in long-run equilibrium when price equals: a. average fixed cost b. average total cost c. marginal cost d. marginal revenue
- A profit-maximizing firm in a competitive market will always make marginal adjustments to production as long as: a. Average revenue is greater than average total cost, b. Average revenue is equal to marginal cost, c. Marginal cost is greater than the aver
- In order to maximize profits, a firm that can sell all it wants without affecting price should produce A. where average variable costs are minimized. B. where marginal cost is equal to average variable costs. C. where marginal cost is equal to price. D. w
- A perfectly competitive firm's marginal cost is $5, marginal revenue is $4, and average variable cost is $3. To maximize profits (or minimize losses), the firm should: A. shut down B. lower the quantity of output (but not shut down) C. leave the quantity
- In the profit-maximizing monopolist sets it price: A. higher than a competitive market would. B. equal to marginal cost. C. where marginal costs equals marginal revenue. D. at whatever price it wants
- Let a firm be in long run competitive equilibrium. The market price will be equal to A. The marginal revenue. B. The marginal cost. C. The average total cost. D. All of the above.
- In a long-run competitive market equilibrium: a. Price equals the minimum of average total cost. b. Price equals the maximum of average total cost. c. Marginal cost equals the maximum of total revenue. d. Marginal cost equals the minimum of total revenue.
- Profit-maximizing firms want to maximize the difference between: a) total revenue and total cost. b) total revenue and marginal cost. c) marginal revenue and average cost. d) marginal revenue and marginal cost.
- The profit-maximizing decision for the monopoly is: a. the same as that of the perfectly competitive firm. b. to choose the quantity where marginal cost equals marginal revenue. c. All of these sta
- If a firm's average cost is rising, then _______. (a) marginal cost is less than the average cost (b) marginal cost is rising (c) marginal cost is greater than the average cost (d) the firm is making an economic profit.
- Which of the following is necessarily true of the profit-maximizing equilibrium of a monopolist who sets a single price? a. Price equals average total cost. b. Price is greater than marginal cost. c. Average total cost is at its minimum level. d. Marg
- If a perfectly competitive firm or a monopoly is maximizing total profit, then it will be: A. maximizing the difference between total revenue and total cost B. maximizing the difference between average revenue and average total cost C. minimizing total co
- When a firm is experiencing diseconomies of scale, long-run: a. average total cost is minimized, b. average total cost is greater than the long-run marginal cost, c. average total cost is less than the long-run marginal cost, d. marginal cost is minimi
- Marginal cost is average variable cost when. a. equal to; average total cost is minimized b. less than; total cost is maximized c. greater than; average fixed cost is minimized d. equal to; average variable cost is minimized
- In the long-run, the profit-maximizing/loss-minimizing firm in a competitive price-taker market will have Price equal to (P=[{Blank}]): a. Average Fixed Cost (AFC) and economic profits are equal to zero, b. Average Variable Cost (AVC) and economic profi
- A perfectly competitive firm produces where: a. marginal cost equals price, while a monopolist produces where price exceeds marginal cost. b. marginal cost equals price, while a monopolist produces where marginal cost exceeds price. c. marginal cost excee
- Under both perfect competition and the monopoly, a firm a. is a price taker. b. is a price maker. c. will shut down in the short run if price falls short of average total cost. d. always earns a pure economic profit. e. sets marginal cost equal to ma
- 1. At the profit-maximizing level of output for a perfectly competitive A) price equals marginal cos B) average revenue equals average variable cost and price equals marginal cost. s average revenue
- A perfectly competitive firm produces where: a. marginal cost equals price, while a monopolist produces where price exceeds marginal cost. b. marginal cost equals price, while a monopolist produces where marginal cost exceeds price. c. price exceeds margi
- To maximize profits, a monopolist chooses the quantity where: a. costs are minimized. b. marginal cost equals zero. c. marginal revenue equals zero. d. marginal revenue equals marginal cost. e. revenues are maximized.
- Suppose a perfectly competitive firm is producing a level of output for which price equals average total cost, and the average total cost is less than marginal cost. In order to maximize its profits, the firm should: a) reduce its output. b) expand its ou
- Which of the following is always true for monopolistically competitive firms in the short run? A. Marginal revenue equals marginal cost. B. Economic profit equals zero. C. Price equals average total cost. D. Average total cost is minimized. E. Margin
- If price is greater than average variable cost and less than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will: a. produce at an economic loss. b. produce at an economic profit. c. shut d
- In perfect competition, a firm maximizes its economic profit if it produces the output at which? A. market price equals marginal revenue B. economic profit equals zero in the short run C. marginal cost equals market price D. total revenue equals tota
- In a perfectly competitive market, in the short run a firm should shut down if a. price is less than average fixed cost when marginal revenue equals marginal cost. b. price is less than average vari
- In the long run, in the model of monopolistic competition, for a typical firm, price is: a. Above average cost but equal to marginal cost, b. Above marginal cost but equal to average cost, c. Above marginal cost, d. Equal to marginal cost and
- The perfectly competitive firm should shut down where: A. marginal revenue is less than marginal cost B. price is less than average total cost C. total revenue is less than total cost D. price is less than average variable cost
- When a perfectly competitive firm decides to shut down, it is most likely that: A) marginal cost is above average variable cost B) marginal cost is above average total cost C) price is below the f
Explore our homework questions and answers library
Browse
by subject