Which of the Following Is True of Perfectly Competitive Firms

question 190

Multiple Choice

Which of the following is true of perfectly competitive firms?

• A) For a perfectly competitive firm, as long as the price derived from expanded output exceeds the marginal cost of that output, the expansion of output creates additional economic profits.
• B) Producing at the profit-maximizing output level means that a firm is actually earning economic profits.
• C) A competitive firm earning zero economic profit will be unable to continue in operation over time.
• D) A perfectly competitive firm will operate in the short run only at price levels greater than or equal to average total costs.

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Definitions:

Causation

The relationship between cause and effect, where one event or action directly results in the occurrence of another.

Correlation Coefficients

Statistical measures that quantify the strength and direction of a relationship between two variables, often denoted as "r".

Illusory Correlations

The experience of detecting associations among factors (usually persons, activities, or behaviors) even in the absence of a genuine relationship.

Expectations

Anticipated outcomes or beliefs about what will happen in the future.