Why should a perfect competitor produce at which price equals marginal cost?
What will be an ideal response?
For a perfect competitor, its market price equals marginal revenue. Because profits are maximized when marginal revenue equals marginal cost, a perfect competitor will therefore maximize profits by producing at marginal revenue equals marginal cost. A lower or higher level of output than that profit-maximizing output level will only result in lower profits.
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The inflation rate is the
A) difference between the current period CPI and the base period CPI. B) percentage change in the composition of the CPI market basket from the base year to the next year. C) difference in the price level from one year to the next multiplied by 100. D) difference between the base period CPI and the current period CPI. E) percentage change in the CPI from one year to the next year.
An important part of the market system is that producers and consumers consider the public interest in making production and consumption decisions.
Answer the following statement true (T) or false (F)