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

question 73

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

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Definitions:

Items

Refers to individual products or services that a company sells or the individual entries that make up a list or collection.

Intangible Assets

Non-physical assets owned by a business, such as patents, trademarks, goodwill, and copyrights, that have economic value and can provide future benefits.

Amortized

The gradual reduction of a debt or the spreading of capital expenses over a period of time.

Research and Development Costs

Expenses associated with the research and development of a company's goods or services, aiming to improve and innovate.