A firm which is a competitor in its output market and a competitor in an input market is:
A)inefficient because VMP MRP and MFC w.
B)inefficient because VMP MRP.
C)efficient.
D)inefficient because MFC w.

Question

A firm which is a competitor in its output market and a competitor in an input market is:
A)inefficient because VMP > MRP and MFC > w.
B)inefficient because VMP > MRP.
C)efficient.
D)inefficient because MFC > w.

Quizplus · Accepted Answer

A firm that is a competitor in both its output market and input market is operating efficiently. This is because it is able to sell its output at a competitive market price and purchase its inputs at a competitive market price, leading to a situation where VMP equals MRP and MFC equals w.

A Firm Which Is a Competitor in Its Output Market