For a Perfectly Competitive Firm, Profit Maximization Occurs When

question 164

Multiple Choice

For a perfectly competitive firm, profit maximization occurs when

• A) marginal revenue equals average total cost.
• B) marginal revenue equals marginal cost.
• C) marginal cost is equal to average total cost.
• D) average total cost is at its minimum.

---

Definitions:

Feasible Allocation

is a concept in economics that refers to the division of resources or goods among various uses or people in a way that is possible given the resources available.

Utility Function

A mathematical representation in economics that captures the level of satisfaction or utility that consumers derive from consuming goods and services.

Desert Island

A secluded and uninhabited island, often used in scenarios and thought experiments in economics and ethics to explore human behavior in isolation.

Competitive Equilibrium

A market situation where supply equates demand, leaving no incentive for price changes, assuming all agents are price-takers.