Ramona is an oyster farmer and the world oyster market is perfectly competitive.

Question

Ramona is an oyster farmer and the world oyster market is perfectly competitive. The market price is $24 a crate. Ramona sells 1,500 crates a week and her marginal cost is $27 a crate. Ramona is 0 A. not maximizing profit because marginal cost is greater than marginal revenue B. not maximizing profit because there is too much competition in the oyster market ° C. maximizing profit if she is selling the maximum amount of oysters she can produce 0 D. not maximizing profit because the world oyster market is perfectly competitive 0 E. maximizing profit because marginal cost is greater than marginal revenue

Explanation / Answer

Answer
Option A

the perfectly competitive firm have P=MR

and the MC>MR

so the firm is not maximizing profit.

the profit is maximum at MR=MC because the marginal profit is zero at MR=MC

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