- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 6. Perfect Competition
CFA Practice Question
Perfectly competitive firms ______
B. maximize total sales.
C. minimize total costs.
D. maximize profits.
A. maximize market share.
B. maximize total sales.
C. minimize total costs.
D. maximize profits.
Correct Answer: D
Profit maximization is the only objective of a perfectly competitive firm.
User Contributed Comments 6
| User | Comment |
|---|---|
| DannyZhou | So do all other types of firms? |
| EMerkert | Monopolistic firms would first seek to maximize market share by undercutting competitors, once this is acheived then they can maximize profits by raising prices without much competition |
| udhay | Why not B,In perfect competition firms can make max profit only thru max sales |
| Thescholar | Maximising sales may lead to increased costs which may therefore not maximise profit |
| vatsal92 | Profit is the sole motive of perfect competition firms. |
| fzhou | MR = MC = ATC_min is profit maximizing rule. |