A Perfectly Competitive Firm Is Producing More Than the Profit-Maximizing

question 131

Multiple Choice

A perfectly competitive firm is producing more than the profit-maximizing amount of its product. You can conclude that its

• A) total cost exceeds its total revenue.
• B) average total cost exceeds the price of the product.
• C) marginal revenue is less than the price of the product.
• D) marginal cost exceeds the price of the product.

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Definitions:

Bushel

A unit of volume that is used primarily in agriculture, specifically for measuring volumes of dry goods such as grains and fruits.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors.

Absolute Advantage

The ability of an entity to produce more of a good or service with the same amount of resources than another entity.

Opportunity Cost

The price paid for not selecting the best available alternative when deciding.