If, for a Perfectly Competitive Firm, Price Exceeds the Marginal

question 36

Multiple Choice

If, for a perfectly competitive firm, price exceeds the marginal cost of production, the firm should

• A)increase its output.
• B)reduce its output.
• C)keep output constant and enjoy the above normal profit.
• D)lower the price.

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Definitions:

Debit Memo

A document issued by a buyer to a seller to correct errors, reduce amounts owed, or return funds in the case of an overpayment.

Perpetual Inventory System

An inventory management system where updates are made continuously as transactions occur, keeping a real-time track of inventory levels.

Freight Charges

Costs associated with the transportation of goods, typically paid by the shipper to the carrier.

Inventory Purchase

The acquisition of goods and materials that a company holds for the purpose of resale or production.