In a Perfectly Competitive Market,the Type of Decision a Firm

question 11

Multiple Choice

In a perfectly competitive market,the type of decision a firm has to make is different in the short run than in the long run.Which of the following is an example of a perfectly competitive firm's short-run decision?

• A) the profit-maximizing level of output
• B) how much to spend on advertising and sales promotion
• C) what price to charge buyers for the product
• D) whether or not to enter or exit an industry
• E) whether or not to change its plant size

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually pay.

Quantity Demanded

The overall quantity of a product or service that buyers are prepared and can afford to buy at a certain price point, during a specific period.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price over a specific time period.

Economic Interaction

Exchanges or transactions between agents in an economy, including individuals, businesses, and governments, that influence the allocation of resources.