6. What is the profit maximizing rule for the perfectly competitive firm? Select

Question

6.

What is the profit maximizing rule for the perfectly competitive firm?

Select one:

a. Produce the quantity where marginal revenue equals marginal cost.

b. Produce the quantity where total cost in the lowest.

c. Produce the quantity where total revenue is the highest.

d. Produce the quantity where marginal revenue is greater than marginal cost.

8.

Below is information for a firm which sells soybeans in a perfectly competitive market.

Output

MC

ATC

100

$4

$6

200

$8

$8

400

$12

$10

If the equilibrium price is $8, how much profit or loss will it make?

Select one:

a. -200

b. 0

c. 200

d. 800

Output

MC

ATC

100

$4

$6

200

$8

$8

400

$12

$10

Explanation / Answer

Answer
Q6
Option a
The perfectly competitive firm's profit maximum producing at MR=MC, also this is perfect competitive firm so the P=MR.
-------
Q7

The firm will profit at MC=P and where ATC=P=$8
and Profit=(P-ATC)*Q
=0*Q
=0
the profit is zero
Option b

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