If a Perfectly Competitive Seller Is Maximizing Profit and Is

question 74

Multiple Choice

If a perfectly competitive seller is maximizing profit and is making zero economic profit,which of the following will this seller do?

• A) go to work in the next-best earning opportunity
• B) shut down, with a loss equal to total fixed cost
• C) continue at the current output, making zero economic profit
• D) increase production in order to make an economic profit
• E) remain open but decrease production in order to make an economic profit

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Definitions:

Inverse Demand

A representation of demand in economics where the price of a good is expressed as a function of the quantity demanded.

Patent

A legal right granted to an inventor, giving them exclusive rights to manufacture, use, or sell their invention for a certain period of time.

Marginal Cost

The change in total cost that arises when the quantity produced increases by one unit.

Industry Output

The total quantity of goods or services produced by all firms within a particular industry.