If a Purely Competitive Firm Is Producing at Some Output

question 21

Multiple Choice

If a purely competitive firm is producing at some output level less than the profit-maximizing output, then

• A) price is necessarily greater than average total cost.
• B) fixed costs are large relative to variable costs.
• C) price exceeds marginal revenue.
• D) marginal revenue exceeds marginal cost.

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Definitions:

Budgeted Sales

The projected amount of sales, in units or dollars, that a company expects to achieve during a specific period.

Credit Sales

Sales in which the customer is allowed to pay for the goods or services at a later date, rather than at the time of purchase.

Raw Materials Purchases

The total cost of all components bought for use in the production process of goods.

Cash Disbursements

Outgoing payments made by a business, often documented in a cash disbursement journal, including expenses, creditor payments, and other financial outflows.