Question

true or false: if bob's fire engines were a competitive firm instead and $80,000 were the market price for an engine, increasing its production would not affect the price at which he can sell engines.

Answer 1

True, if bob's fire engines were a competitive firm instead and $80,000 were the market price for an engine, increasing its production would not affect the price at which he can sell engines.

A fully competitive firm's total revenue grows smoothly at a constant pace dictated by the current market price as it consistently generates more output.

For a perfectly competitive firm, profits will be highest—or losses will be lowest—at the output quantity where total revenues surpass total costs by the greatest margin, or where total revenues fall short of total costs by the narrowest margin.

A totally competitive corporation is unable to control the price it charges because it must accept the price for its output that is established by the supply and demand for the product in the market. In other words, since the price is predetermined by the profit formula, a firm that operates in a fully competitive market can sell any quantity of units at the same price.

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