Which statement is TRUE?

Question

Quizplus · Accepted Answer

In perfect competition, there are numerous suppliers producing identical products. Therefore, the individual firm's output is too small to affect the market price, and it has to accept the market price as its own. As a result, the price and marginal revenue are the same in perfect competition. Option A is incorrect because if the price falls below the average total cost, the firm will incur losses in the short run. Option C is incorrect because economic profit per unit is found by subtracting average total cost from the price. Option D is incorrect because economic profit can be negative or positive in the short run.

Which Statement Is TRUE