If a Perfectly Competitive Firm Wanted to Maximize Its Total

question 33

Multiple Choice

If a perfectly competitive firm wanted to maximize its total revenues,it would produce

• A)The output where MC equals price.
• B)As much as it is capable of producing.
• C)The output where the ATC curve is at a minimum.
• D)The output where the marginal cost curve is at a minimum.

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Definitions:

Implicit Costs

Costs that represent the opportunity cost of using resources owned by the firm for its own production instead of earning income elsewhere.

Accounting Profit

The net income reported on the financial statements, calculated as total revenues minus explicit costs.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Marginal Product

The additional output that is produced by adding one more unit of a particular input, holding all other inputs constant.