If a Perfectly Competitive Firm in the Short Run Is

question 99

Multiple Choice

If a perfectly competitive firm in the short run is producing where P = ATC = MC, this firm is

• A) on the downward- sloping portion of its demand curve.
• B) at its profit- maximizing output level.
• C) earning economic profits.
• D) incurring losses.
• E) obliged to shut down.

---

Definitions:

Preferred Stock

Preferred stock is a type of equity security that provides dividends and certain privileges in the event of liquidation before common stock, but typically does not carry voting rights.

Perpetuity

An annuity that has no end, or a stream of cash payments that continue indefinitely.

Efficient Markets Hypothesis

The theory that all known information is already reflected in stock prices, implying that stocks always trade at their fair value, making it impossible to consistently achieve higher returns than the market overall.

Security Prices

The cost at which a particular financial security, such as stocks or bonds, is bought or sold in the market.