In a short-run equilibrium of a perfectly competitive market, each firm is:
A. operating at its minimum efficient scale.
B. producing where its marginal cost is at its minimum.
C. producing where the average variable cost is at its minimum.
D. maximizing profits given the price.
E. just losing the sunk cost.
Marginal cost and price are the same in a perfectly competitive market. They are directly related to each other which means an increase in one variable causes the increase in another variable and a decrease in one variable causes a decrease in another variable.
Answer and Explanation: 1
Option D. maximizing profits given the price is correct
This option is correct because, in perfect competition, the short run equilibrium of profit...
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fromChapter 3 / Lesson 63
Learn the definition of perfect competition and understand how a perfectly competitive market works. Study the characteristics of a perfectly competitive market with examples.