Asked by
Mariam Hossam
on Dec 04, 2024
Verified
Suppose your firm operates in a perfectly competitive market and decides to double its output. How does this affect the firm's marginal profit?
A) Marginal revenue and marginal cost increase
B) Marginal revenue increases but marginal cost remains the same
C) Marginal cost may change but marginal revenue remains the same
D) Marginal revenue and marginal cost decrease
Marginal Profit
Marginal profit is the additional profit gained from producing or selling one more unit of a good or service.
Perfectly Competitive Market
A market structure characterized by many buyers and sellers, all producing a homogenous product, with no single entity able to influence the market price.
Marginal Revenue
The extra income a company earns by selling an additional unit of a product or service.
- Understand the behavior of firms in perfectly competitive markets, including how prices and outputs are determined.
- Analyze the relationship between total revenue (TR), total cost (TC), marginal revenue (MR), and marginal cost (MC) and their implications for profit maximization.
Verified Answer
AH
Learning Objectives
- Understand the behavior of firms in perfectly competitive markets, including how prices and outputs are determined.
- Analyze the relationship between total revenue (TR), total cost (TC), marginal revenue (MR), and marginal cost (MC) and their implications for profit maximization.