If a Perfectly Competitive Firm Is Producing 500 Units of Output

question 75

Multiple Choice

If a perfectly competitive firm is producing 500 units of output and the marginal revenue from producing the 500th unit of output is $3 and the marginal cost is $3.50, which of the following is true?

• A)The firm should increase production.
• B)The firm is producing the profit-maximizing output.
• C)The firm is earning a profit from producing the 500th unit.
• D)The firm should decrease production.

---

Definitions:

Alcohol

A colorless volatile liquid, scientifically known as ethanol, commonly used in beverages and as a solvent or fuel.

Neural Systems

Complex networks of neurons and synapses in the brain and nervous system that process and transmit information.

Frustration-Aggression Principle

A psychological theory suggesting that frustration often leads to aggressive behavior, as aggression is a result of blocked, desired goals.

Evolutionary Psychology

A theoretical approach in psychology that examines human thoughts, feelings, and behaviors through the lens of natural selection and adaptation.