If a Perfectly Competitive Firm Is Producing 2,000 Units And

question 20

Multiple Choice

If a perfectly competitive firm is producing 2,000 units and, at the 2,000th unit, the difference between marginal revenue and marginal cost (MR - MC) is zero, which of the following is true?

• A)The firm should exactly double production to maximize profit.
• B)The firm should decrease production to maximize profit.
• C)The firm is maximizing profit.
• D)The firm should increase production to maximize profit.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or service output, such as materials and labor.

Budgetary Control

The process of managing a company's income and expenditure with the aim of keeping spending in line with the budget.

Actual Results

The realized outcomes or final figures of a company's financial performance or operations, often compared against budgeted or forecasted figures.

Flexible Budgets

Budgets that can be adjusted or modified according to the changes in operational activities or business volume.