Consider a Perfectly Competitive Industry in the Short-Run

question 101

Multiple Choice

Consider a perfectly competitive industry in the short-run.When a firm in this industry is at its profit-maximizing level of output,it

• A)is doing as well as it can and is making a profit.
• B)may be making a profit or incurring a loss.
• C)is producing where P = AVC.
• D)is producing where MC = AC.
• E)is producing where price exceeds marginal cost.

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Definitions:

Farms

Land and the buildings on it used for the cultivation of crops and rearing of animals to produce food, wool, and other products.

Price

The cost needed to buy a product or service, usually set by the interplay of supply and demand.

Quantity

The amount or number of a material or immaterial goods that is measured or counted.

Long Run

In economics, a period of time in which all factors of production and costs are variable, allowing all inputs to be adjusted.