If You Were the Owner of a Price-Taker Firm Operating

question 53

Multiple Choice

If you were the owner of a price-taker firm operating at an output level where the marginal cost of producing another unit was $5, and the market price was $7, then you

• A) could increase your profit by expanding output.
• B) could increase your profit by decreasing output.
• C) are maximizing your profit at your current output level.
• D) will be able to earn positive economic profits in the long run.

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Definitions:

Simplify

To reduce something to its most basic or uncomplicated form, making it easier to understand or deal with.

R

Often used as a symbol representing the interest rate or rate of return in financial equations.

Budgeted Sales

The projected amount of sales revenue a company expects to earn over a specific period, often used for planning purposes.

Actual Sales

The real revenue generated from goods or services sold, measured within a specific period.