Asked by Matias Morales on May 14, 2024
Verified
Which of the following represents an accurate situation for a perfectly competitive firm?
A) P = $12 and MR = $8
B) P = $5 and MR = $7
C) P = $9 and MR = $9
D) P = $16 and MR = $0
Perfectly Competitive
A perfectly competitive market is an economic concept where numerous small firms compete against each other with homogenous products, and no single firm can influence the market price.
MR = MC
A condition in economics where the marginal revenue (MR) of producing one more unit of a good matches the marginal cost (MC) of producing that unit, used in determining the optimum production quantity.
- Acquire knowledge on the factors and effects of participating in a market characterized by perfect competition.
- Understand the connection between marginal cost (MC), marginal revenue (MR), average total cost (ATC), and the maximization of profits.
Verified Answer
MM
Marlen MckellarMay 19, 2024
Final Answer :
C
Explanation :
In a perfectly competitive market, the price (P) equals the marginal revenue (MR) because firms are price takers and can sell any quantity of goods at the market price.
Learning Objectives
- Acquire knowledge on the factors and effects of participating in a market characterized by perfect competition.
- Understand the connection between marginal cost (MC), marginal revenue (MR), average total cost (ATC), and the maximization of profits.