If, for a Perfectly Competitive Firm, Price Is Greater Than

question 171

Multiple Choice

If, for a perfectly competitive firm, price is greater than average variable cost, then it follows that

• A)total revenue is greater than total cost.
• B)total revenue is greater than total variable cost.
• C)the firm will lose more or earn less by shutting down in the short run than by continuing to produce.
• D)b and c
• E)There is not enough information to answer the question.

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Definitions:

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Held-to-Maturity Debt Securities

Debt investments that a company has the positive intent and ability to hold until their maturity dates, typically reported at amortized cost.

Fair Value Method

An accounting approach where assets and liabilities are reported at their prices that would be received to sell an asset or paid to transfer a liability.

Cost Method

An accounting method where investments are recorded at their acquisition cost without considering market value changes unless a permanent decline in value has occurred.