If a Firm Finds That Its Marginal Cost Is Greater

question 77

Multiple Choice

If a firm finds that its marginal cost is greater than its price,it

• A)Should reduce production.
• B)Is maximizing its profit.
• C)Should increase production.
• D)Is maximizing its total revenue.

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Definitions:

Residual Dividend Policy

A strategy where dividends are paid to shareholders from the residual or leftover equity only after all project capital needs are met.

Loan Indentures

Formal agreements specifying the terms of a bond or loan, including the interest rate, repayment schedule, and other conditions.

Covenants

Clauses in a contract or loan agreement that stipulate certain actions that must be taken or avoided by the borrower.

Dividend Payments

Periodic payments made by a company to its shareholders out of its profits or reserves.