If a Perfectly Competitive Firm Finds That It Is Producing

question 64

Multiple Choice

If a perfectly competitive firm finds that it is producing an amount of output such that MR > MC
And P > AVC, it will

• A) decrease its output.
• B) increase its output.
• C) not change its behaviour.
• D) leave the industry.

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Definitions:

Treasury Bonds

Treasury bonds are long-term government debt securities issued by the Department of the Treasury with a maturity of more than ten years.

Federal Budget

The government's estimate of revenue and expenditure for a forthcoming fiscal year.

GDP Gap

The amount of production by which potential GDP exceeds actual GDP.

Aggregate Demand

The total demand for all goods and services in an economy at a given overall price level and within a specific time period.