Based on the Accompanying Graph,is This Firm Earning Positive,negative,or Zero

question 148

Multiple Choice

Based on the accompanying graph,is this firm earning positive,negative,or zero economic profits?

• A)We cannot determine the firm's level of profit because we do not know about its revenues.
• B)It is earning positive economic profit.
• C)Because this is the short run,all firms earn positive economic profit.
• D)It is earning zero economic profit.
• E)It is earning negative economic profit.

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Definitions:

Market Value

The present cost at which a service or asset is available for purchasing or selling on the open market.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the market capitalization remains the same.

Par Value

The face value of a bond or stock as stated by the issuing company, which may or may not reflect the security's market value.

Stock Split

A corporate action to increase the number of outstanding shares while reducing the price per share, keeping the overall market capitalization the same.