Question

A perfectly competitive firm will produce the quantity of output at which _______ = _______ to determine the profit maximizing or ____________, ___________level. In order to produce additional units of output we need the following:
a. additional hours of labor at $15 per hour
b. additional units of material at $2 per unit
c. additional pounds of zinc at $1 per pound
What is the cost, the above statement is referring to?

Answer 1

Answer:

Price; marginal cost; cost minimizing; output; Cost of production or cost of inputs involved in production

Explanation:

In perfect competition a firm is in equilibrium when its marginal cost of production is equal to the price of its product. The firm will be able to maximize profit or minimize cost at this point.

The demand curve is a horizontal line, which means demand is perfectly elastic. A change in the price will cause the demand to become zero.

The cost mentioned here is the cost incurred to employ inputs in the process of production, which is an explicit cost.