Under Perfect Competition, the Efficient Level of Output Is Produced

question 101

Multiple Choice

Under perfect competition, the efficient level of output is produced because

• A) government regulates the output level that must be produced.
• B) firms earn only a normal profit in the long run.
• C) firms can earn an economic profit in the long run.
• D) price equals marginal cost.

---

Definitions:

Fixed Expenses

Costs that do not vary with the level of production or sales, such as rent, insurance, and salaries, providing predictability in budgeting.

Break-even

The point at which total costs equal total revenues, meaning there is no profit or loss.

Variable Cost

Variable cost is a cost that changes in proportion to the level of production or business activity, such as raw materials and direct labor.

Monthly Dollar Sales

The total revenue generated from sales, expressed in dollars, for a specific month.