If a Perfectly Competitive Firm Is Producing an Output Level

question 107

Multiple Choice

If a perfectly competitive firm is producing an output level that sets its marginal revenue equal to its short- run marginal cost (MR = MC) and its long- run marginal cost (MR = LMC) , the firm______ .

• A)is maximizing its long- run profit, but not its short- run profit
• B)is maximizing its short- run and long- run profit
• C)is maximizing its short- run profit, but not its long- run profit
• D)should increase production to maximize its short- run and long- run profit

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Definitions:

Exports

Goods or services sent from one country to another for sale.

Imports

Merchandise or services that are brought from one nation into another for retail purposes.

Trade Surplus

A situation where the value of a country's exports exceeds the value of its imports, indicating a positive balance of trade.

Exports

Goods or services produced in one country and sold to buyers in another, contributing to the exporting country's GDP.