Which of the Following Is True for a Firm Operating

question 114

Multiple Choice

Which of the following is true for a firm operating under perfect competition, monopolistic competition, and monopoly?

• A) Firms earn positive economic profits in the long run.
• B) Firms earn zero economic profits in the long run.
• C) Profits are maximized when marginal cost equals marginal revenue.
• D) Price equals marginal cost.

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Definitions:

Production Possibilities

A curve or frontier representing the maximum combination of goods and services that can be produced efficiently with available resources and technology.

Specialize

To focus on a particular area of expertise or production, often to increase efficiency or performance in that area.

Comparative Advantage

The principle that holds a party can produce some goods at a lower relative cost than another, promoting beneficial trade.

Other Goods

The term refers to any goods that are not directly under consideration but can still affect the market situation, such as substitute or complementary goods.