Which of the Following Statements Is TRUE for Both a Competitive

question 109

Multiple Choice

Which of the following statements is TRUE for both a competitive market and a single-price monopoly?

• A) The firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.
• B) The firm can make an economic profit in the long run.
• C) The price is set where the supply curve and demand curve intersect.
• D) The firm always produces at the lowest possible long-run average cost.

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Definitions:

Fixed Cost

Costs that do not change with the level of output or sales, such as rent, salaries, and loan payments.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.

Net Profit

The actual profit after working expenses not included in the calculation of gross profit have been paid.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.