When Price Is Greater Than Marginal Cost for a Firm

question 140

Multiple Choice

When price is greater than marginal cost for a firm in a competitive market,

• A) marginal cost must be falling.
• B) the firm must be minimizing its losses.
• C) there are opportunities to increase profit by increasing production.
• D) the firm should decrease output to maximize profit.

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Definitions:

Curve

In economics, a graphical representation showing the relationship between two varying quantities, such as supply and demand.

Slope

A measure of the steepness, incline, or grade of a line, representing the rate of change between variables on a graph.

Cholera Epidemic

An outbreak of the bacterial disease cholera, characterized by severe diarrhea and dehydration, often spreading in areas with inadequate access to clean water and sanitation.

Omitted Variables

Variables that are relevant for a regression analysis but are not included by the model, potentially leading to biased results.