In the Short Run,the Profit-Maximizing Behaviour for a Price-Taking Firm

question 36

Multiple Choice

In the short run,the profit-maximizing behaviour for a price-taking firm requires it to operate where

• A)P = MC,given that P is greater than or equal to ATC.
• B)P = TR = TC.
• C)P > MR > MC.
• D)AVC = AR.
• E)P = MC,given that P is greater than or equal to AVC.

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Definitions:

Amortization

The process of spreading out the cost of an intangible asset over its useful life or the repayment of loan principal over time.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, reflected in its income statement.

Contractual Interest Rate

The agreed-upon rate of interest to be paid on loans or bonds, specified within a contract.

Annual Rate

A yearly interest rate that accounts for compounding over a 12-month period.