The competitive firm will (A) produce 7 units at a loss of $14.00.
What is a competitive firm?
- A perfectly competitive firm is a price taker, which means it must accept the equilibrium price at which it sells items.
- If a completely competitive firm attempts to charge even a small bit more than the market price, it will be unable to make any sales.
- The three fundamental criteria of perfect competition are that (1) no company has a significant market share, (2) industry output is standardized, and (3) there is freedom of entry and departure.
- In perfect competition, the efficient market equilibrium is where marginal revenue equals marginal cost.
To find what the competitive firm will make:
- According to the table, the firm will produce 7 units at a loss of $14.00.
Therefore, the competitive firm will (A) produce 7 units at a loss of $14.00.
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The complete question:
The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $28, the competitive firm will Multiple Choice
(A) produce 7 units at a loss of $14.00.
(B) produce 6 units at a loss of $23.80.
(C) produce 4 units at a loss of $17.40.
(D) shut down in the short run.
