Profit-maximizing firms enter a competitive market when existing firms in that market have
A)total revenues that exceed fixed costs.
B)total revenues that exceed total variable costs.
C)average total costs that exceed average revenue.
D)average total costs less than market price.

Question

Quizplus · Accepted Answer

Profit-maximizing firms will enter a competitive market only if their average total costs are less than the market price. This is because if their costs are higher than the market price, they will not be able to make a profit and will exit the market. Therefore, option D is the correct answer.

Profit-Maximizing Firms Enter a Competitive Market When Existing Firms in That