A Firm in a Perfectly Competitive Industry Will Maximize Profits

question 97

Multiple Choice

A firm in a perfectly competitive industry will maximize profits by adjusting

• A) average total cost until it equals price.
• B) price until marginal revenue equals marginal cost.
• C) output until average revenue equals short- run average total cost.
• D) price until average revenue equals average total cost.
• E) output until marginal cost equals marginal revenue.

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Definitions:

Average Price Level

An economic measure that calculates the weighted average of prices across a basket of goods and services, often used to identify inflation or deflation in an economy.

Net Exports

The difference between a country's total value of exports and its total value of imports within a certain timeframe.

Government Purchases

Spending by the government on goods and services, which is part of fiscal policy to influence the nation's economy.

GDP

Gross Domestic Product, a measure of the economic output of a country, expressing the total value of all goods and services produced over a specific time period.