Profit Maximizing Under Perfect Competition And Monopoly
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- Profit Maximizing Under Perfect Competition And Monopolyeconomics-mcqs › profit-maximizing-under-perfect-competition-and-monopoly
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- 30 May 2019
- Last updated
- 28 May 2026
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A company operating in a perfectly competitive market produces 50 units, which is its profit-maximizing output. The market price per unit is £2, with total fixed costs of £25 and total variable costs amounting to £40. What is the firm's economic profit?
Multiple choice question for Profit Maximizing Under Perfect Competition And Monopoly. Select an option, then review the explanation below.
Explanation
The firm's total revenue is 50 units × £2 = £100. Total costs equal fixed costs (£25) plus variable costs (£40), totaling £65. Economic profit is total revenue minus total costs: £100 - £65 = £35.
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Practice related questions from the same subject.
- 1.In markets that are contestable, how do dominant oligopoly firms typically behave?
- 2.According to the kinked demand curve model in oligopoly markets, how does the elasticity of demand behave when prices change?
- 3.Under which scenario is a cartel most likely to be successful?
- 4.What term describes an agreement between parties to set prices and output levels collectively?
- 5.What do we call an industry where only a few companies hold the majority of market power?