The correct statement from the options provided is:
"In the short run, output decisions involve revenues, costs, and profit minimization."
Here's a brief explanation of each statement:
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A perfectly competitive firm faces a perfectly elastic demand. - This statement is true but is often not directly listed as "correct" in some contexts. In perfect competition, individual firms are price takers and face a perfectly elastic demand curve at the market price.
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Total revenue is simply price multiplied by the fixed cost that the firm decides to produce and sell. - This statement is incorrect. Total revenue is calculated as price multiplied by the quantity sold, not fixed costs.
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In the short run, output decisions involve revenues, costs, and profit minimization. - This statement is correct. In the short run, firms evaluate costs and revenues to determine the optimal output level, aiming to maximize profits or minimize losses.
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A perfectly competitive firm faces a demand curve that is a vertical line. - This statement is incorrect. In perfect competition, the demand curve faced by an individual firm is horizontal (perfectly elastic) at the market price, not vertical.
Thus, the third statement is the most accurate answer.
1 answer