In Economics, the Purpose of Competition Is To

question 39

Multiple Choice

In economics, the purpose of competition is to:

• A) ensure that every firm survives.
• B) motivate firms to make the highest possible profit.
• C) motivate firms to make better goods at lower cost.
• D) prevent unemployment.

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Definitions:

Marginal Revenue

The additional income that a firm receives from selling one more unit of a good or service, crucial for decision-making in production levels.

Natural Monopoly

A market condition where a single firm can supply a product or service to an entire market at a lower cost than what would be possible if there were multiple firms due to economies of scale.

Production

The process of creating goods or services through the combination of labor, materials, and technology, which contributes to economic output.

Maximum Profit

The highest possible financial gain that a company can achieve in a given period under existing conditions.