An Important Difference Between the Situation Faced by a Profit-Maximizing

question 209

Multiple Choice

An important difference between the situation faced by a profit-maximizing competitive price-searcher firm in the short run and the situation faced by that same firm in the long run is that in the short run,

• A) price may exceed marginal revenue, but in the long run, price will equal marginal revenue.
• B) price may exceed marginal cost, but in the long run, price will equal marginal cost.
• C) price may exceed average total cost, but in the long run, price will equal average total cost.
• D) there are many firms in the market, but in the long run, there are only a few firms in the market.

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Definitions:

Substitute Products

Goods or services that can serve as replacements for each other, meeting the same needs or desires of the consumers, thereby providing a choice.

Potential Substitutes

Products or services that serve as alternatives to an organization's offerings, which consumers might consider if available or for better value.

Average Profitability

The mean financial gain or return from an investment or business operation after subtracting all expenses.

Patented Technologies

Technologies protected by patents, prohibiting unauthorized use, reproduction, or distribution.