Question

6. Which of the following statements is (are) correct?
(x) Since the market for wheat is considered to be competitive, a wheat farmer maximizes profit by choosing a quantity at which the market price of wheat is greater than the farm's marginal cost of production.
(y) If rational, profit-maximizing firms analyze at the margin, then marginal adjustments to production should increase profit (decrease loss) if the firm is not at its profit-maximizing amount of output.
(z) When price is less than marginal cost for a firm in a competitive market, there are opportunities to increase profit by increasing production.

If a competitive firm is selling 120,000 units of its product at a price of $7 and the firm is earning a positive economic profit, then its
(x) total revenue equals $840,000 and its total cost must be less than $840,000.
(y) marginal revenue equals $7 and its average revenue equals $7
(z) accounting profit is more than $840,000
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Answer 1