If a Perfectly Competitive Firm with a Known Demand and Random

question 178

Multiple Choice

If a perfectly competitive firm with a known demand and random marginal cost is producing at a level in which the marginal cost is less than the expected marginal cost and the marginal revenue, which of the following is true?

• A)To maximize expected profit, the firm should decrease production by one- half.
• B)The firm is maximizing expected profit.
• C)To maximize expected profit, the firm should increase production.
• D)To maximize expected profit, the firm should decrease production.

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Definitions:

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Evaluation Apprehension

Anxiety or fear about being judged or assessed by others.

Self-Directed Work Teams

Groups of employees who are given the autonomy and responsibility to manage themselves and their work, including decision-making and problem-solving processes.

Supervisors

Individuals within an organization responsible for overseeing and guiding the performance of a group of employees, ensuring tasks are completed effectively.