In the Short Run, a Perfectly Competitive Firm Will Always

question 141

Multiple Choice

In the short run, a perfectly competitive firm will always shut down if total revenue is ____ at all positive output levels.

• A) less than total cost
• B) less than total cost but greater than variable cost
• C) less than total cost but greater than fixed cost
• D) greater than fixed cost
• E) less than variable cost

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Definitions:

Profit Maximizing

The process or objective of adjusting production and sale levels to achieve the highest possible profit.

Economic Profit

The surplus left after subtracting total costs from total revenue, taking into account both explicit and implicit costs.

Total Revenue

The overall amount of money generated by a business from its sales of goods or services, calculated by multiplying the selling price by the quantity sold.

Maximizes Profits

The strategy employed by firms to achieve the highest possible profit from their operations, often through increasing revenue, reducing costs, or both.