If the Market Price Is $5 and a Perfectly Competitive

question 116

Multiple Choice

If the market price is $5 and a perfectly competitive firm is producing 1,200 units and the marginal cost to produce the 1,200th unit is $4.53, which of the following is true?

• A)The firm is maximizing profit.
• B)The firm should decrease production to maximize profit.
• C)The difference between marginal revenue and marginal cost (MR - MC)for the 1,200th unit is negative.
• D)The difference between marginal revenue and marginal cost (MR - MC)for the 1,200th unit is positive.

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