A Competitive Firm Has Been Selling Its Output for $20

question 367

Multiple Choice

A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price rises to $25, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, its

• A)quantity of output is higher than it was previously.
• B)average total cost is higher than it was previously.
• C)marginal revenue is higher than it was previously.
• D)All of the above are correct.

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Definitions:

Mediating Variable

A factor that helps explain the relationship between two variables, often intervening in the cause-and-effect process.

Predictor Variable

A variable in research that is believed to influence or forecast changes in another variable or outcome.

Dependent Variable

In research and experiments, the variable that is being tested and measured, expected to change as a result of manipulations to the independent variable.

Path-Goal Theory

A leadership theory that suggests leaders should adjust their style to fit the employee's and task's needs to achieve a goal.