The Competitive Market Price of a Good

question 66

Multiple Choice

The competitive market price of a good

• A) Is equal to the value consumers place on the last unit they purchased
• B) Is equal to the cost of producing an extra unit of the good
• C) Must exceed the cost of producing an extra unit of the good
• D) Must be less than what consumers are willing to pay for an additional unit of the good

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Definitions:

Operating Profit

Earnings before interest and taxes (EBIT), representing the profit a business makes from its operations.

Selling Price

The amount for which a product or service is sold to the customer.

Unit Cost

The expenditure involved in generating, keeping, or obtaining one unit of a product or service.

Overhead

An ongoing expense of operating a business, such as rent, utilities, and salaries.