Which of the Following Is True for a Firm Operating

question 73

Multiple Choice

Which of the following is true for a firm operating under perfect competition, monopolistic competition and monopoly?

• A) Firms earn positive economic profits in the long run.
• B) Firms earn zero economic profits in the long run.
• C) Profits are maximised when marginal cost equals marginal revenue.
• D) Price equals marginal cost.

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Definitions:

Desired Profit

The target profit a company aims to achieve, taking into account costs, pricing strategies, and market conditions.

Incremental Costs

The additional costs incurred when a business increases its level of activity or output, also known as marginal cost.

Additional Revenues

Income received that is over and above the main or expected sources of revenue for a business or an organization.

Direct Material

Raw materials that are directly attributable to the production of goods, essential in determining the cost of goods sold.