The Largest Loss a Profit-Maximising Perfectly Competitive Firm Can Incur

question 38

Multiple Choice

The largest loss a profit-maximising perfectly competitive firm can incur in the short run equals its

• A) total variable cost.
• B) average total cost multiplied by the number of units produced.
• C) total fixed cost.
• D) marginal cost multiplied by the number of units produced.
• E) average variable cost multiplied by output.

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Definitions:

Depreciation

A measure of the decrease in value of an asset over time, often due to wear and tear or obsolescence.

Inventory Investment

Refers to the change in the level of stocked goods in a period, contributing to the calculation of Gross Domestic Product (GDP).

Net Investment

The total spending on new capital assets minus the depreciation on existing capital.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting a decrease in value over time.