Suppose That in a Perfectly Competitive Industry,the Market Price of the Product

question 19

Multiple Choice

Suppose that in a perfectly competitive industry,the market price of the product is $12.Firm A is producing the output level at which average total cost equals marginal cost,both of which are $10.To maximize its profits,Firm A should

• A)reduce its output.
• B)expand its output.
• C)leave its output unchanged.
• D)increase its advertising.
• E)change the price of the product.

---

Definitions:

Tangible Capital

Assets that have a physical form such as machinery, buildings, and land, which are used in the production of goods or services.

Inventory

This term describes the total amount of goods or materials a business has on hand at any given time.

Capital Goods

Assets with a long lifespan that are employed in the creation of goods and services, including machinery, equipment, and buildings.

Economic System

The structure and methods by which a society decides on the allocation of resources and distribution of goods and services.