Which of the Following Statements Is True

question 80

Multiple Choice

Which of the following statements is true ?

• A) To maximize profits, a firm must maximize total revenue.
• B) In long-run equilibrium, a competitive firm produces at the point of minimum average total cost.
• C) In the short-run, a perfectly competitive firm produces where total cost is minimum.
• D) In the short-run, a perfectly competitive firm will close down whenever price is less than average total cost.

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Definitions:

Total Reserves

The sum of a bank's deposits held at the central bank and the cash physically held in the bank's vault.

Required Reserves

The minimum amount of reserves that a bank must hold as mandated by the central bank or regulatory authority, usually a percentage of the bank's deposit liabilities.

Excess Reserves

Funds held by banks over and above the legally mandated reserve requirement, which can be lent out to generate additional income or held as a safeguard against potential withdrawals.

Bank A

A generic term used to denote a financial institution licensed to receive deposits, offer loans, and provide other financial services to its customers.