Posted by G on .
As a general rule, profit-maximizing producers in a competitive maket produce output at a point where:
A) Marginal cost is increasing
B) Marginal cost is decreasing
C) marginal revenue is increasing
D) Price is less then marginal revenue
I picked C?
The short-run supply curve for a firm in a perfecly competive market is:
A) Likely to be horizontal
B) Likely to slope downward
C) Determined by forces external to the firm
D) It's marginal cost curve (above average variable cost)
I picked B?
1) no no no. First marginal revenue would not be increasing in a competitive market (or any other market). Go with A
2) no no no. Short run SUPPLY should be upward sloping. Go with D
I had figured out the 2 question answer is D.
I am not clear why the first question answer is A.
I know production takes place until MC=MR.
Why would it then be A