Suppose a Perfectly Competitive Firm Can Increase Its Profits by Increasing

question 187

Multiple Choice

Suppose a perfectly competitive firm can increase its profits by increasing its output.Then it must be true that the firm's _____ exceeds its _____.

• A)marginal revenue;marginal cost
• B)price;average total cost but is less than marginal cost
• C)marginal cost;marginal revenue
• D)price;marginal revenue

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Definitions:

Decentralization

The distribution of decision-making powers and authority away from a central location or authority to local or individual actors.

Authority

The legal or rightful power or right to make decisions, give orders, and enforce rules within a particular scope or role.

Operating Decisions

Choices made by management regarding the day-to-day operations of a business, such as pricing, inventory management, and employment levels.

Profit Center

A decentralized unit in which the manager has the responsibility and the authority to make decisions that affect both costs and revenues (and thus profits).