Understanding the Supply Curve and Profit Maximization in Competitive Firms
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Questions and Answers

What is the goal of a competitive firm?

  • To minimize revenue
  • To ignore market conditions
  • To maximize profit (correct)
  • To decrease quantity produced

    • What is the key assumption for a perfectly competitive firm?

  • Price is constant (correct)
  • Price is controlled by the firm
  • Price is variable
  • Price is irrelevant

    • What does the long-run market supply curve reflect?

  • Individual firm's marginal revenue curves (correct)
  • Market demand curve
  • Firms' short-run decisions to shut down
  • Price changes over time

    • At what output level does profit maximization occur?

    <p>Where marginal revenue equals marginal cost</p> Signup and view all the answers

    When do firms in perfectly competitive markets shut down in the short run?

    <p>When price is less than average total cost</p> Signup and view all the answers

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