At its current level of quantity, a perfectly competitive firm's marginal revenue is $2.50, its short-run marginal cost is $2.50 and its long-run marginal cost is $2.00. Which of the following statements is true?
A) The firm is maximizing its long-run profit, but not its short-run profit.
B) The firm should decrease its production to maximize profit in the short-run.
C) The firm should increase its production to maximize profit in the short-run.
D) The firm is maximizing its short-run profit, but not its long-run profit.
D) The firm is maximizing its short-run profit, but not its long-run profit.
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All the following are assumptions of the classical model EXCEPT
A) pure competition exists. B) buyers and sellers react to nominal money prices rather than to relative prices. C) wages and prices are flexible. D) people are motivated by self-interest.
For a perfectly competitive firm,
a. marginal revenue equals total revenue b. total revenue always exceeds total cost c. price always exceeds average total cost d. marginal cost always equals average cost e. the marginal revenue curve and the demand curve lie on top of each other