When Price Is Greater Than Both Marginal Cost and Average

question 347

Multiple Choice

When price is greater than both marginal cost and average variable cost, the perfectly competitive firm

• A) is maximizing economic profit.
• B) should increase its level of output.
• C) should reduce its level of output.
• D) should stop production.

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Definitions:

Lactate

A compound produced in the body during the anaerobic conversion of glucose to energy, often associated with muscle fatigue.

NAD+

Nicotinamide adenine dinucleotide, a coenzyme found in all living cells that is involved in redox reactions, carrying electrons from one reaction to another.

Oxygen

A chemical element (O) essential for most forms of life on earth, playing a key role in cellular respiration and energy production.

ATP

Adenosine triphosphate, a high-energy molecule that stores and transports chemical energy within cells for metabolism.