In a perfectly competitive market,the type of decision a firm has to make is different in the short run than in the long run.Which of the following is an example of a perfectly competitive firm's short-run decision?
A) the profit-maximizing level of output
B) how much to spend on advertising and sales promotion
C) what price to charge buyers for the product
D) whether or not to enter or exit an industry
E) whether or not to change its plant size

Question

Quizplus · Accepted Answer

In the short run, firms in a perfectly competitive market can only make decisions about how much output to produce, since they are constrained by their fixed inputs (e.g. plant size). The profit-maximizing level of output is therefore the main decision that a firm can make in the short run. Choices B, C, D, and E are long-run decisions that a firm may make in a perfectly competitive market.

In a Perfectly Competitive Market,the Type of Decision a Firm