If the Price Is Greater Than Average Total Cost at the Profit-Maximizing

question 155

Multiple Choice

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run,a perfectly competitive firm will:

• A)produce at a loss.
• B)produce at a profit.
• C)shut down production.
• D)produce more than the profit-maximizing quantity.

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Definitions:

Credit Purchases

Transactions where goods or services are bought using credit instead of immediate cash payment, impacting liabilities and cash flow.

Receivables Turnover

This is a financial ratio that measures how efficiently a company collects debts from its customers, indicating how many times receivables are converted into cash in a period.

Interval Measure

The interval measure is a liquidity metric that estimates how long a company can operate using its current liquid assets without needing additional financing.

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets. It is calculated as (current assets - inventories) / current liabilities.