When the Perfectly Competitive Firm Produces the Quantity of Output

question 70

Multiple Choice

When the perfectly competitive firm produces the quantity of output at which marginal revenue equals marginal cost, it naturally

• A)produces the quantity of output at which marginal cost equals price, since for the perfectly competitive firm price equals marginal revenue.
• B)produces the quantity of output at which short-run average total cost equals price, since for the perfectly competitive firm short-run average total cost equals marginal revenue.
• C)earns a profit, since equating marginal revenue and marginal cost guarantees profit.
• D)takes a loss.

---

Definitions:

Nth Partial Sum

The sum of the first 'n' terms in a sequence, used in series calculations.

Geometric Sequence

A sequence in which each number following the first is generated by multiplying the former number by a fixed, nonzero factor, this factor is identified as the common ratio.

Partial Sum

The sum of a portion of a sequence of terms, or a method of summing certain numbers by grouping.

N Th

Referring to an unspecified member of a series or set.