At Its Current Level of Quantity, a Perfectly Competitive Firm's

question 85

Multiple Choice

At its current level of quantity, a perfectly competitive firm's marginal revenue is $2.50, its short- run marginal cost is $2.50 and its long- run marginal cost is $2.00. Which of the following statements is true?

• A)The firm should decrease its production to maximize profit in the short- run.
• B)The firm should increase its production to maximize profit in the short- run.
• C)The firm is maximizing its short- run profit, but not its long- run profit.
• D)The firm is maximizing its long- run profit, but not its short- run profit.

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Definitions:

Stabilize Supply

Actions or strategies implemented to ensure a consistent and reliable supply of goods, preventing shortages or excessive inventory.

Interest Revenue

Income that is earned from investments in interest-bearing accounts like savings accounts, bonds, or loans.

Cash

Money in the form of coins or banknotes, especially that issued by a government to be used in the exchange of goods and services.

Interest Receivable

The amount of interest earned but not yet received by the lender or investor.