Asked by
Rachelle Dulos
on Oct 08, 2024
Verified
If production is occurring where marginal cost exceeds price,the purely competitive firm will:
A) maximize profit,but resources will be underallocated to the product.
B) maximize profit,but resources will be overallocated to the product.
C) fail to maximize profit and resources will be overallocated to the product.
D) fail to maximize profit and resources will be underallocated to the product.
Marginal Cost
The increase in total cost that arises from producing one additional unit of a product or service.
Maximize Profit
To maximize profit, a firm seeks to increase the difference between its total revenues and total costs through optimal pricing strategies and efficient production.
- Illustrate the effects that marginal cost pricing has on allocating resources and enhancing a firm's financial gains.
- Understand the situations that result in economic profitability and explore their effects on the actions of businesses, as well as on market entry and exit strategies.
Verified Answer
RE
Learning Objectives
- Illustrate the effects that marginal cost pricing has on allocating resources and enhancing a firm's financial gains.
- Understand the situations that result in economic profitability and explore their effects on the actions of businesses, as well as on market entry and exit strategies.