MBA 701 - Chapter 8 | Questions with 100% Verified Answers |
Latest Update 2026/2027
Question: A perfectly competitive firm maximizes profits at the level of
output such that market price______________________ marginal cost
Answer:
Equals
Question: A perfectly competitive firm maximizes profits at a point
where P ________ MC over the range where MC is _________.
Answer:
Equals; increasing
Question: For a perfectly competitive firm, marginal revenue is equal to
the market ________________.
Answer:
Price
Question: When price (P) exceeds minimum average variable cost (AVC),
each unit of output sold generates ___________ revenue than the
cost per unit of the variable inputs.
Answer:
more
Question: Define the competitive firm's demand.
a. Df = P = TR
b. Df = P = MC
c. Df = P = Supply
d. Df = P = MR
Answer:
d.
, Question: To maximize profits, a perfectly competitive firm should
produce in the range of increasing marginal cost where P =
MC and
a. P ≤ AVC
b. MR < MC
c. P ≥ AVC
d. MR > MC
Answer:
c.
Explanation: A perfectly competitive firm should produce in the range of increasing
marginal cost (IMC), where the price (P) equals the marginal cost (MC) to maximize
profits. This occurs at the point where the marginal revenue (MR) equals marginal cost
(MC), and the firm will produce at any output level above this point. The IMC range is the
area where producing one more unit leads to higher profit margins, and output prices
remain low enough for demand to be relatively inelastic. By focusing on efficient
production and optimizing the output level, the firm can maximize its profits in the
competitive market.
Question: In perfect competition, profit equals
a. Costs - Revenues
b. RevenuesCostsRevenuesCosts
c. Revenues - Costs
d. Revenues × Costs
Answer:
c.
Question: A perfectly competitive firm's short-run supply curve is its
marginal cost above the minimum point of the _______ curve.
a. average total cost (AC)
b. average fixed cost (AFC)
c. average variable cost (AVC)
Answer:
c.
Question: In perfect competition, profits are maximized at a level of
output such that
a. the vertical distance between the revenue line and the cost
curve is greatest.
b. the vertical distance between the revenue line and the cost
curve is smallest.
c. the total amount of costs generated is the smallest
d. the total amount of revenue generated is the largest.
Answer:
a
Latest Update 2026/2027
Question: A perfectly competitive firm maximizes profits at the level of
output such that market price______________________ marginal cost
Answer:
Equals
Question: A perfectly competitive firm maximizes profits at a point
where P ________ MC over the range where MC is _________.
Answer:
Equals; increasing
Question: For a perfectly competitive firm, marginal revenue is equal to
the market ________________.
Answer:
Price
Question: When price (P) exceeds minimum average variable cost (AVC),
each unit of output sold generates ___________ revenue than the
cost per unit of the variable inputs.
Answer:
more
Question: Define the competitive firm's demand.
a. Df = P = TR
b. Df = P = MC
c. Df = P = Supply
d. Df = P = MR
Answer:
d.
, Question: To maximize profits, a perfectly competitive firm should
produce in the range of increasing marginal cost where P =
MC and
a. P ≤ AVC
b. MR < MC
c. P ≥ AVC
d. MR > MC
Answer:
c.
Explanation: A perfectly competitive firm should produce in the range of increasing
marginal cost (IMC), where the price (P) equals the marginal cost (MC) to maximize
profits. This occurs at the point where the marginal revenue (MR) equals marginal cost
(MC), and the firm will produce at any output level above this point. The IMC range is the
area where producing one more unit leads to higher profit margins, and output prices
remain low enough for demand to be relatively inelastic. By focusing on efficient
production and optimizing the output level, the firm can maximize its profits in the
competitive market.
Question: In perfect competition, profit equals
a. Costs - Revenues
b. RevenuesCostsRevenuesCosts
c. Revenues - Costs
d. Revenues × Costs
Answer:
c.
Question: A perfectly competitive firm's short-run supply curve is its
marginal cost above the minimum point of the _______ curve.
a. average total cost (AC)
b. average fixed cost (AFC)
c. average variable cost (AVC)
Answer:
c.
Question: In perfect competition, profits are maximized at a level of
output such that
a. the vertical distance between the revenue line and the cost
curve is greatest.
b. the vertical distance between the revenue line and the cost
curve is smallest.
c. the total amount of costs generated is the smallest
d. the total amount of revenue generated is the largest.
Answer:
a
