If a Perfectly Competitive Firm Produces an Output Level at Which

question 1

Multiple Choice

If a perfectly competitive firm produces an output level at which price is greater than marginal cost, then the firm should:

• A)employ more fixed factors of production.
• B)reduce output to earn greater profits or smaller losses.
• C)expand output to earn greater profits or smaller losses.
• D)leave its output decision unchanged because it is earning a profit.

Understand the relationship between price elasticity and profit maximization.

Understand the basics and implications of third-degree price discrimination in monopolistic markets.

Recognize the importance of demand elasticity in price-setting strategies for monopolists.

Comprehend how different market segments affect monopolist pricing strategies.

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