If Price Is Greater Than Marginal Cost,a Perfectly Competitive Firm

question 96

Multiple Choice

If price is greater than marginal cost,a perfectly competitive firm should increase output because

• A)Marginal costs are increasing.
• B)Additional units of output will add to the firm's profits (or reduce losses).
• C)The price it receives for its product is increasing.
• D)Total revenues would increase.

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Definitions:

Sale

The act of selling a product or service in exchange for money or other compensation.

Equity Securities

Financial instruments that represent ownership interest in a company, such as stocks.

Significant Influence

The power to participate in the financial and operating policy decisions of an investment but is not control or joint control of those policies.

Voting Stock

Shares that grant the holder the right to vote on company matters, such as electing the board of directors.