Consider a Firm Operating in a Perfectly Competitive Market

question 190

Multiple Choice

Consider a firm operating in a perfectly competitive market. At its current output of 200 units, marginal revenue is $28. At this output, average total cost is minimized and equals $25. Given this information, what should the firm do?

• A)​Continue to produce 200 units, since costs per unit are minimized
• B)​Increase output beyond 200 units, since this higher output will yield the profit maximizing output level.
• C)​Decrease output below 200 units, since this lower output will result in the profit maximizing output level.
• D)​More information is needed to determine the firm's next step.

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Definitions:

Competitive Intelligence

Competitive intelligence involves gathering and analyzing information about competitors' activities, strategies, and strengths, to inform business decision-making.

Market Share

is the portion of a market controlled by a particular company or product, typically expressed as a percentage.

Metamediary

An intermediary platform that connects buyers and sellers across multiple sectors, often providing comparison and aggregation services.

Marketspace

A virtual market environment, made possible through digital technologies, where businesses and consumers conduct transactions online.