A competitive firm’s profit-maximizing
price is $15. At MC 5 MR, the output is
100 units. At this level of production, average total costs are $12. The firm’s profits are
a. $300 in the short run and long run.
b. $300 in the short run and zero in the
long run.
c. $500 in the short run and long run.
d. $500 in the short run and zero in the
long run.
What would happen to revenues if a firm
in a perfectly competitive industry raised
price?
a. They would increase.
b. They would increase but profit would
decrease.
c. They would increase along with profit.
d. They would fall to zero.
