If a Perfectly Competitive Firm Is Producing Where Its MR=MC,but

question 122

Multiple Choice

If a perfectly competitive firm is producing where its MR=MC,but is operating to the left of the minimum point of its LRAC curve,

• A)it cannot be optimizing its short-run behaviour.
• B)it can reduce its average costs by building a larger plant.
• C)it can still be in long-run equilibrium as long as P = SRATC.
• D)its profits will decrease if it builds a larger plant.
• E)it is in a long-run profit maximizing position.

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold, reflecting the core profitability of a company's operations.

Operating Expenses

Costs related to the normal day-to-day operations of a business, excluding the cost of goods sold.

Cost Of Goods Sold

The total cost directly associated with producing or acquiring the goods sold by a company during a specific period.