If a firm is a profit maximizer and faces positive marginal costs,
A) there is a natural limit to the size of the firm, where MR = 0.
B) there is no natural limit to the size of the firm; it can be as large as it wants to be.
C) there is a natural limit to the size of the firm, where MR > 0.
D) there is no natural limit to the size of the firm, hence the need for government regulation.
Question 2
In a perfectly competitive market,
A) firms can freely enter and exit.
B) firms sell a differentiated product.
C) transaction costs are high.
D) All of the above.