Under Both Perfect Competition and Monopoly, a Firm

question 66

Multiple Choice

Under both perfect competition and monopoly, a firm:

• A) is a price taker.
• B) maximizes profit by setting marginal cost equal to marginal revenue.
• C) will shut down in the short-run if price falls short of average total cost.
• D) always earns a pure economic profit.

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Definitions:

Drive Reduction

A theory in psychology that explains behavior as driven by the need to reduce internal tensions caused by unmet biological needs.

Incentives Necessary

The concept that motivation or behavior is influenced by a reward or incentive.

Ongoing Behavior

Behavior that is currently in process, continuing over a period of time.

Predictive Cues

Indicators or signals that suggest the likelihood of a future event or outcome.