Assume Dell Computer Company Operates in a Perfectly Competitive Market

question 33

Multiple Choice

Assume Dell Computer Company operates in a perfectly competitive market producing 5,000 computers per day. At this output level, marginal cost exceeds this firm's price. To maximize profits, Dell should

• A) make no adjustments as they are already maximizing their profits.
• B) increase their output.
• C) decrease their output.
• D) stop producing since it is earning a loss.

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Definitions:

Fixed Price

A set cost that does not change over time, regardless of variations in market conditions or demand.

Preferred Stock

A category of corporate ownership that has precedence over common stock in terms of asset and earnings claims, typically featuring fixed dividend payments.

Bonds

Fixed-income instruments that represent a loan made by an investor to a borrower, typically corporate or governmental.

Constant Payment

A fixed amount of money paid periodically in a loan agreement until the loan is repaid in full, including both principal and interest.