The Profit-Maximizing Level of Output for a Perfectly Competitive Firm

question 96

Multiple Choice

The profit-maximizing level of output for a perfectly competitive firm in the short run occurs where:

• A) marginal cost equals price.
• B) marginal revenue equals price.
• C) total revenue equals total cost.
• D) average revenue equals average total cost.

---

Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold before accounting for other expenses, indicating the fundamental profitability of a company's products or services.

Total Current Assets

The sum of all assets owned by a company that are expected to be converted into cash, sold, or consumed within one year or a business cycle, whichever is longer.

Cash Collection

The process of gathering all cash received from sales, services, and other sources.

Bad Debt Expense

The cost associated with accounts receivable that a company is unable to collect from its debtors.