Author Question: It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal cost ... (Read 55 times)

Zoey63294 · **on:** Jul 1, 2018

It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal cost curve. In order for this to be true, which of the following additional assumptions are necessary? I. That the firm seek to maximize profits. II. That the marginal cost curve be positively sloped. III. That price exceeds average variable cost. IV. That price exceeds average total cost.
a. All of the above.
b. I and II but not III and IV.
c. I and III but not II and IV.
d. I and II only.
e. I, II and III, but not IV.

Question 2

The markup pricing technique involves determining the selling price of a good by adding a profit markup to minimum average cost. This would result in maximum profits only if
a. average cost were constant.
b. the markup were zero.
c. the markup varied with the elasticity of demand.
d. demand were inelastic.