A Perfectly Competitive Firm That Should Not Shut Down in the Short

question 162

Multiple Choice

A perfectly competitive firm that should not shut down in the short run will maximize profit where

• A)VC = 0
• B)FC = 0
• C)AFC = MC
• D)P = MC
• E)ATC = 0

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Definitions:

Profit-Maximizing

The process by which a firm determines the price and output level that returns the greatest profit.

Purely Competitive

Refers to a market structure where many firms sell identical products, allowing no single firm to influence the market price.

Marginal Resource Cost

The extra cost associated with utilizing one additional unit of a resource in the production process.

Daily Wage

A pay rate based on the amount of work completed in a single day, typically used for manual or labor-intensive jobs.