A Perfectly Competitive Firm Sells Its Output for $100 Per

question 111

Multiple Choice

A perfectly competitive firm sells its output for $100 per unit and marginal cost is $100 per unit. To maximize short-run profit, the firm should:

• A) increase output.
• B) decrease output.
• C) maintain its current output.
• D) shut down.

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Definitions:

Supply of Labor

The total hours that workers are willing and able to work at a given wage rate.

Wages

Remuneration provided to laborers for their services, usually based on an hourly, daily, or task-completion method.

Total Compensation

The complete pay package for employees including all forms of money, benefits, services, and in-kind payments.

Direct Payments

Cash transfers from the government to individuals or businesses for various purposes without any requirement for reciprocation.