If a Profit-Maximizing Firm in a Perfectly Competitive Market Is

question 14

Multiple Choice

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)price is greater than marginal cost.
• B)price is greater than marginal revenue.
• C)marginal cost is greater than marginal revenue.
• D)marginal cost is greater than average total cost.
• E)average total cost is greater than marginal cost.

---

Definitions:

FMV

Fair Market Value (FMV) refers to the price at which an asset would sell in the marketplace under conditions where both buyer and seller have reasonable knowledge of the asset and are willing to trade without external pressures.

Basis

Basis is the amount of investment in property for tax purposes, used to calculate gain or loss on a sale or other disposition of the property.

Capital Gain

Profit from the sale of property or an investment when the selling price exceeds the purchase price.

Tax Depreciation

An accounting method that allows a taxpayer to allocate the cost of a tangible asset over its useful life, offering tax deductions over this period.