If at Its Current Production Level, a Perfectly Competitive Firm's

question 2

Multiple Choice

If at its current production level, a perfectly competitive firm's marginal revenue and long- run marginal cost are equal to $1.50 and its long- run average cost is $1.65, which of the following statements is true?

• A)The firm should expect to earn positive economic profit indefinitely.
• B)The firm should expect the market price of its product to increase.
• C)The firm should expect the market supply curve to increase.
• D)The firm should expect the market price of its product to fall.

---

Definitions:

Net Income

The total earnings of a company after deducting all expenses and taxes from total revenue, indicating the company's profitability.

Prepaid Expenses

Payments made in advance for goods or services to be received in the future, recorded as assets until they are consumed.

Accrual Basis

An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.

Accounts Receivable

Money owed to a company by its customers or clients for goods or services provided on credit.