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March 26, 2017

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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?

  • Micoreconomics - ,

    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

  • Micoreconomics - ,

    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

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