- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 1. Supply Analysis: Cost, Marginal Return, and Productivity
CFA Practice Question
Which of the following is a competitive business firm able to control?
B. The amount of output it produces
C. The amount of economic profit it earns in the long run
A. The demand for its product
B. The amount of output it produces
C. The amount of economic profit it earns in the long run
Correct Answer: B
The objective of the firm is to determine how much output to produce in order to maximize profit at the given market price.
User Contributed Comments 3
| User | Comment |
|---|---|
| MFTIOA | The amount of economic profit it earns in the long run = 0 |
| magicchip | Amount of output is the only thing a perfectly competitive company is able to control. |
| Nyoiks | since a perfectly competitive firm is a price taker, it cannot control its price.it can only control its output at a given price level, wea P<ATC/equal to ATC |