Consider a Perfectly Competitive Firm in the Short Run

question 110

Multiple Choice

Consider a perfectly competitive firm in the short run.Assume that the firm produces the profit-maximizing output and earns economic profits.Which statement is definitely FALSE?

• A)Price is equal to marginal cost.
• B)Price is equal to marginal revenue.
• C)Price is equal to average total cost.
• D)Marginal cost is greater than average total cost.

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Definitions:

Operating Cycle

The time period between the acquisition of goods for sale and the receipt of cash from customers, measuring the efficiency of a company's operational processes.

Inventory Purchases

Transactions involved in buying goods and materials to be sold or used in the production process by a business.

Collection of Cash

Collection of cash involves the process of receiving cash payments from customers or clients, typically recorded as an increase in cash or cash equivalents on the balance sheet.

Accrual Basis Accounting

Revenues are recognized when goods and services are provided to customers, and expenses are recognized in the same period as the revenues to which they relate, regardless of when cash is received or paid.