In the Short Run a Firm in a Competitive Market

question 2

Multiple Choice

In the short run a firm in a competitive market will produce nothing when:

• A)price is less than SMC.
• B)its maximum profit is negative.
• C)price is less than the minimum value of SAVC.
• D)STC exceeds total revenue.

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Definitions:

Option

A financial derivative that represents a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified strike price on or before a specified date.

Employee Stock Options

A right, purchased from one party by another, granting the purchaser the option, but not the requirement, to either buy (call) or sell (put) a share at a pre-decided price during a specific timeframe or on a certain date.

Align Goals

The process of adjusting strategies or actions to ensure that various objectives or aims are in harmony or agreement.

Shareholder Goals

The objectives or desired outcomes of individuals or entities that own shares in a corporation, usually focused on value appreciation, dividends, and company governance.