If a Perfectly Competitive Firm Produces at an Output Level

question 84

Multiple Choice

If a perfectly competitive firm produces at an output level where marginal cost equals marginal revenue, then

• A) the difference between TR and TC is zero.
• B) the firm should shut down.
• C) the firm is maximizing its revenue.
• D) there is no reason to reduce or expand output, as long as AVC is greater than or equal to price.
• E) the last unit produced adds the same amount to costs as it does to revenue.

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Definitions:

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values.

Systematic Risk

Systematic risk refers to the overall market risk that cannot be eliminated through diversification, affecting all investments to some extent.

Trade Deficit

A situation where a country's imports of goods and services exceed its exports, leading to a negative balance of trade.