By Comparing Marginal Revenue and Marginal Cost, a Firm in a Competitive

question 411

Multiple Choice

By comparing marginal revenue and marginal cost, a firm in a competitive market is able to adjust production to the level that achieves its objective, which we assume to be

• A)maximizing total revenue.
• B)maximizing profit.
• C)minimizing variable cost.
• D)minimizing average total cost.

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Definitions:

Government Intervention

Actions taken by the government to influence or directly control economic or market conditions.

External Costs

Costs incurred by third parties who are not involved in a transaction, often leading to market failure if not properly accounted for.

Perfect Information

A market condition where all participants have complete and identical information about the product, including its price and quality.

Minimum Imposed Price

An external intervention (usually by the government) to set a price floor, preventing the market price from falling below a certain level.