CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Refer to the graph below. Assuming that the industry operates under conditions of perfect competition and that the firms seek to maximize profits, each firm in the industry will ______

A. produce 800 square feet of construction per month in the short run.
B. produce 1000 square feet of construction per month in the short run.
C. incur economic losses in the short run.
Explanation: Price equals marginal cost at this output level in the short run.

User Contributed Comments 3

User Comment
cbb1 P=MR=MC for pure competition
bmesfin Is this possible under perfect competion? Should not price be at the min of ATC?
deleseleuc It would be under the long run. But because the question specifies only the short run we have to assume they are currently producing at P = 60
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