If a Firm in a Perfectly Competitive Market Is Producing

question 13

Multiple Choice

If a firm in a perfectly competitive market is producing at a level of output where marginal costs are less than marginal revenue:

• A)its profits must be positive.
• B)its profits are maximized.
• C)its profits will increase if they produce less.
• D)None of these is true.

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Definitions:

Agency Coupled

A principal-agent relationship that cannot be terminated at will by the principal because it includes an interest beneficial to the agent.

Principal

The original amount of money loaned or invested, separate from interest or earnings.

Terminate

To bring to an end or conclude something, such as a contract, employment, or process.

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.