Choosing an Output Rate at Which Price Equals Marginal Cost

question 21

Multiple Choice

Choosing an output rate at which price equals marginal cost maximizes profits for the perfectly competitive firm because further increases in the output rate would

• A) increase total cost.
• B) decrease total revenue.
• C) add more to total cost than it would to total revenue.
• D) result in a price decline.
• E) increase average fixed cost more than average variable cost.

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Definitions:

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An automatic and rapid response to a stimulus without conscious thought.

Involuntary Response

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