If a Perfectly Competitive Firm's Average Total Cost Curve Is

question 220

Multiple Choice

If a perfectly competitive firm's average total cost curve is above its demand schedule at every level of output, then the firm will earn ________ profits.

• A) positive
• B) break-even
• C) negative
• D) zero

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Definitions:

Year amount

An expression referring to the total amount or figures calculated over a year's period.

Average cost method

An inventory costing method where the cost of goods sold and ending inventory is calculated based on the average cost of all units available for sale during the period.

Periodic system

An inventory accounting system in which updates to inventory levels and cost of goods sold are made at the end of an accounting period rather than after each sale.

Ending inventory

The aggregate worth of products ready for sale at the close of an accounting period, determined by summing up acquisitions to the initial inventory and deducting the cost of goods sold.