The Profit-Maximizing Condition for a Firm Selling Its Output in a Competitive

question 58

Multiple Choice

The profit-maximizing condition for a firm selling its output in a competitive market and buying its resources in a competitive market is

• A) P = MC only.
• B) MRP = wage only.
• C) Both A and B.
• D) Neither A nor B.

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Definitions:

Rent

The payment made by a tenant to a landlord for the use of a property or space.

Substitution Effect

The economic principle that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Output Effect

The Output Effect describes how changes in price levels affect the quantity of goods and services produced in an economy, influencing overall economic output.

Substitute Resources

Alternative means or materials that can be used to achieve the same function or production goal in the absence of preferred resources.