As Long as It Does NOT Shut Down, a Profit-Maximizing

question 106

Multiple Choice

As long as it does NOT shut down, a profit-maximizing perfectly competitive firm will

• A) always earn an economic profit.
• B) produce so that marginal revenue equals marginal cost.
• C) produce so that price equals average cost.
• D) never set its price equal to its marginal revenue.

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Definitions:

Dominant

In a strategic or competitive context, dominant refers to a position of advantage where an entity (such as a firm, product, or strategy) significantly outperforms or influences others.

Marginal Revenue

Marginal revenue is the additional income generated from selling one more unit of a good or service.

Marginal Cost

The cost of producing one additional unit of a good or service, reflecting how total cost changes with output variation.

Monopoly

is a market structure characterized by a single seller dominating the entire market by selling a unique product or service.