Post Utme Wellspring University 2018 Economics Question 1

Practice objective / multiple choice question 1 from the 2018 Post Utme Wellspring University Economics examination.

Post Utme Wellspring University 2018 Economics Objective / Multiple Choice
Question 1 POST_UTME_WELLSPRING_UNIVERSITY • 2018 • ECONOMICS • objective

Consider a firm operating in a perfectly competitive market with a downward-sloping demand curve. If the firm's marginal revenue (MR) curve intersects its marginal \cost (MC) curve at point E, where MR = MC, and the price elasticity of demand is unit elastic at point E, what is the implication for the firm's profit-maximizing output?

Answer Options

Correct Answer A. The firm will produce at the point where MR = MC, and the price elasticity of demand is unit elastic.
B. The firm will produce at the point where MR = MC, but the price elasticity of demand is not unit elastic.
C. The firm will not produce at the point where MR = MC, and the price elasticity of demand is unit elastic.
D. The firm will not produce at the point where MR = MC, and the price elasticity of demand is not unit elastic.
Correct Answer
A
Correct Option:
The firm will produce at the point where MR = MC, and the price elasticity of demand is unit elastic.

About This Question

This is Post Utme Wellspring University 2018 Economics Question 1. It is one of the objective questions from the 2018 Post Utme Wellspring University Economics examination.

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