In the Short Run, a Perfectly Competitive Firm Will Always

question 160

Multiple Choice

In the short run, a perfectly competitive firm will always shut down if, at all output levels above zero,

• A)price is less than average total cost
• B)total revenue is less than total cost
• C)they cannot pay variable costs with total revenue
• D)variable cost is greater than fixed cost
• E)price is less than fixed cost

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Definitions:

Note Payable

A written promise to pay a specific amount of money, either on demand or at a set future date, typically used in business to document debt agreements.

Debtor's Book Value

The value of all debts owed to a company, often reflecting the accounts receivable balance on the balance sheet.

Unsecured Creditors

Creditors who have lent money without taking any collateral, thus bearing a higher risk in case of debtor's default.

Liabilities With Priority

Obligations that are given preference over other liabilities in the case of liquidation or bankruptcy, often secured or legally mandated.