If a Perfectly Competitive Firm Is Producing Where Its MR=MC,but

question 122

Multiple Choice

If a perfectly competitive firm is producing where its MR=MC,but is operating to the left of the minimum point of its LRAC curve,

• A)it cannot be optimizing its short-run behaviour.
• B)it can reduce its average costs by building a larger plant.
• C)it can still be in long-run equilibrium as long as P = SRATC.
• D)its profits will decrease if it builds a larger plant.
• E)it is in a long-run profit maximizing position.

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Definitions:

OEM

Original Equipment Manufacturer, a company that produces parts and equipment that may be marketed by another manufacturer.

Shift Rail Detent

A mechanism in manual transmissions that helps hold a gear in place once it has been selected.

Detent Lug

A mechanical feature designed to prevent or restrict movement until an opposing force is applied, often used in gear selection.

Multiple Countershaft Transmission

A transmission design that features more than one countershaft, allowing for improved torque distribution and selection of gear ratios.