If a Comparison Between Average Cost and Price Reveals Whether

question 39

Multiple Choice

If a comparison between average cost and price reveals whether a firm is earning profits, then a comparison between average variable cost and price reveals

• A) that if the market price exceeds average cost, profits will be positive.
• B) that if the market price is below average cost, then profits will be negative.
• C) total revenues are the quantity produced multiplied by the price.
• D) whether the firm is earning profit if fixed costs are left out of the calculation.

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Definitions:

Preliminary Sample

An initial sample drawn from a population, often used to test procedures or make preliminary estimates before a larger study.

Interval Estimate

An estimate of a population parameter that provides a range of values within which the parameter is expected to lie, often associated with a specific confidence level.

Estimated σ

Approximation of the standard deviation (σ), a measure of the dispersion or variation of a distribution.

Normal Probability Distribution

A bell-shaped probability distribution, also known as Gaussian distribution, that is fully defined by its mean and standard deviation.