A Perfectly Competitive Firm Is Producing at the Point Where

question 318

Multiple Choice

A perfectly competitive firm is producing at the point where its marginal cost equals its marginal revenue. If the firm boosts its output, its total revenue will

• A) rise and its total variable cost will rise even more.
• B) rise and its total variable cost will rise, but not by as much.
• C) fall but its total variable cost will rise.
• D) fall and its total variable cost will fall, but not by as much.

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Definitions:

Government Program

An initiative undertaken by a government body to achieve specific social, economic, or political objectives, often involving expenditure from public funds.

Subsidy

Financial assistance granted by the government, organizations, or individuals to support businesses, markets, or activities deemed beneficial to the public interest.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded by consumers.

Price Ceiling

A legally imposed limit on how high a price can be charged for a product, service, or commodity.