Asked by Taylor Johnson Mathias on May 05, 2024
Verified
In the short run, a perfectly competitive profit maximizing firm that has not shut down:
A) is operating on the downward-sloping portion of its AVC curve.
B) is operating at the minimum of its AVC curve.
C) is operating on the upward-sloping portion of its AVC curve.
D) is not operating on its AVC curve.
E) can be at any point on its AVC curve.
Perfectly Competitive
A market structure characterized by many small buyers and sellers, identical products, and no barriers to entry or exit.
Profit Maximizing
The strategy or technique of optimizing production and pricing for the utmost profit.
AVC Curve
The Average Variable Cost curve, showing the per-unit variable cost of production at different levels of output.
- Comprehend the connection between economic gains, average total expenditure, and average variable expenditure during the short-term period.
Verified Answer
ZK
Zybrea KnightMay 06, 2024
Final Answer :
C
Explanation :
In the short run, a perfectly competitive profit-maximizing firm that has not shut down will be operating where marginal cost equals marginal revenue, which is typically on the upward-sloping portion of its average variable cost (AVC) curve. This is because the AVC curve typically slopes upwards after reaching its minimum point, reflecting increasing marginal costs as output increases.
Learning Objectives
- Comprehend the connection between economic gains, average total expenditure, and average variable expenditure during the short-term period.
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