-The Figure Above Shows Short-Run Cost Curves for a Perfectly

question 93

Multiple Choice

-The figure above shows short-run cost curves for a perfectly competitive firm. If the price of the product is $8, in the short run the firm will

• A) make zero economic profit.
• B) make an economic profit.
• C) incur an economic loss.
• D) None of the above answers is correct because more information is needed to determine the firm's economic profit or loss.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by comparing current assets to current liabilities.

Inventory Turnover Ratio

A measure of how frequently a company sells and replaces its inventory over a certain period; calculated as cost of goods sold divided by the average inventory.

Inventory Turnover Ratios

A financial metric indicating the number of times a company’s inventory is sold and replaced over a specified period, critical for evaluating inventory efficiency.

Quick Ratios

A financial metric used to gauge a company's liquidity by comparing its most liquid assets, without inventory, to its current liabilities.