If Price Is Greater Than Average Total Cost at the Profit-Maximizing

question 141

Multiple Choice

If price is greater than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will:

• A) produce at a loss.
• B) produce at a profit.
• C) shut down production.
• D) produce more than the profit-maximizing quantity.

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Definitions:

Financing Activities

All transactions (other than interest payments) involving borrowing from creditors or repaying creditors as well as transactions with the company’s owners.

Cash Flow

The total amount of money being transferred into and out of a business, measuring its financial health.

Accounts Payable

Liabilities of a business representing money owed to creditors for goods and services received.

Accounts Receivable

Funds that customers owe to a business for products or services provided but have not yet been paid.