If a Price Taker Produces an Output Level Where Price

question 153

Multiple Choice

If a price taker produces an output level where price is less than marginal cost,then the firm should

• A) raise its price.
• B) pay less to its fixed factors of production.
• C) decrease output to earn a higher profit or a smaller loss.
• D) increase output to earn a higher profit or a smaller loss.
• E) leave its output decision unchanged.

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Definitions:

Corporate Tax Rate

The percentage of corporate profits that is paid to the government as tax, varying by country and sometimes by the size or type of corporation.

After-Tax Salvage Value

The after-tax salvage value is the net value of a depreciated asset at the end of its useful life, after accounting for taxes on any difference between the sales price and the book value of the asset.

Straight-Line Depreciation

A technique for distributing the expense of a physical asset evenly across its lifespan in identical yearly sums.

Tax Rate

The percentage at which an individual or corporation is taxed, often varying by income level, legal entity, or country.