Consider the Following Short-Run Cost Curves for a Profit-Maximizing Firm

question 106

Multiple Choice

Consider the following short-run cost curves for a profit-maximizing firm in a perfectly competitive industry. FIGURE 9-2
-Refer to Figure 9-2.If the market price is $2,the firm will

• A)produce zero output.and make zero profit.
• B)produce zero output.and suffer a loss equal to its fixed cost.
• C)continue operating in the short run and suffer a loss that is less than its fixed cost.
• D)produce 300 units and make a loss equal to total variable cost.
• E)produce 200 units and make a loss equal to its total fixed cost.

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Definitions:

Perpetual Inventory System

An inventory management method where records of inventory quantities are updated on a continuous basis as sales and purchases are made.

Statement Of Income

A financial document that outlines a company's revenues, expenses, and net income over a specific period, providing insight into financial performance.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.