When a Firm Faces a Perfectly Competitive Market and Buys

question 54

Multiple Choice

When a firm faces a perfectly competitive market and buys its inputs from perfectly competitive markets,the only choice the firm has to affect its profits is to:

• A)increase its selling price.
• B)change the quantity it produces.
• C)decrease the selling price.
• D)None of these is true.

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Definitions:

Quoted

The stated price at which a security is offered for sale on a stock exchange or in the financial markets.

Zero-Coupon Bond

A bond that does not pay interest during its life and is sold at a discount from its face value.

Face Value

The nominal value printed on a financial instrument like a bond or stock certificate, indicating its legal worth at issuance.

Implicit Interest

The interest rate that is not explicitly stated but inferred from the difference between the purchase price and the total payments to be made in a financing transaction.