Which of the following statements about profit maximizing firms in a competitive market is FALSE?

Question

Quizplus · Accepted Answer

In a competitive market, for a firm to maximize profit, it must produce at the point where marginal cost equals marginal revenue. Therefore, statement C is true. In the long run, firms earn zero economic profit because new firms can enter the market if existing firms are earning positive economic profit, which increases supply and drives down prices. Therefore, statement A is true. Since firms in a competitive market are price takers, they must sell at the market price, which equals marginal revenue. Therefore, statement D is also true. The false statement is B, which contradicts the condition for profit maximization in a competitive market.

Which of the Following Statements About Profit Maximizing Firms in a Competitive