A Firm Has a Current Ratio of 1; in Order

question 100

Multiple Choice

A firm has a current ratio of 1; in order to improve its liquidity ratios, this firm might

• A) improve its collection practices and pay accounts payable, thereby decreasing current liabilities and increasing the current and quick ratios.
• B) increase inventory, thereby increasing current assets and the current and quick ratios.
• C) decrease current liabilities by utilizing more long-term debt, thereby increasing the current and quick ratios.
• D) improve its collection practices, thereby increasing cash and increasing its current and quick ratios.

Identify the relationship between market demand and individual firm's profits in a perfectly competitive market.

Comprehend the concept of marginal revenue and how it relates to a firm's pricing and output decisions.

Understand the significance of the marginal cost in profit maximization for firms in perfectly competitive markets.

Grasp the conditions under which perfectly competitive firms decide to produce or shut down in the short run.

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