To maximize its profit,in the short run a perfectly competitive firm decides
A) what price to charge for its product.
B) what quantity of output to produce.
C) whether to exit the market.
D) whether to increase the size of its plant.
E) how much advertising it should undertake.

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm will maximize profit by producing the quantity of output where marginal cost equals marginal revenue, and setting the price equal to the market price. The firm cannot exit the market in the short run, as there are sunk costs involved. Increasing the size of the plant or undertaking significant advertising are long-run decisions, and are not relevant in the short run for maximizing profits.

To Maximize Its Profit,in the Short Run a Perfectly Competitive