Which of the following statements about a competitive firm is correct?
A)To maximize profits, a competitive firm should produce the output level at which total revenue is greatest.
B)In long-run equilibrium, a competitive firm will produce at the point of minimum average total costs.
C)A competitive firm will produce in the short run so long as total receipts are sufficient to cover total fixed costs.
D)A competitive firm will close down in the short run whenever price is less than the minimum attainable average total cost.

Question

Quizplus · Accepted Answer

In long-run equilibrium, a competitive firm will adjust its output so that it can produce at the point of minimum average total costs. This ensures the firm is as efficient as possible, maximizing its profits by minimizing costs per unit of output.

Which of the Following Statements About a Competitive Firm Is