If a Firm Is Making Zero Profits, Then Which of the Following

question 60

Multiple Choice

If a firm is making zero profits, then which of the following must be true?

• A)price equals average total cost
• B)price equals marginal cost
• C)the firm is operating at its efficient scale
• D)the firm is not marking up over marginal cost

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Definitions:

Offsetting Profits

Earnings that counterbalance or mitigate losses from another aspect of a company’s operations or investments.

Successful Mergers

The combining of two or more companies in a way that results in increased value generation, efficiency gains, and enhanced competitiveness in the market.

Rapid Growth

This denotes a phase where a company or economy experiences an above-average increase in revenue, production, or other significant measures over a short time.

Acquisitions

The process of obtaining control of another corporation by purchasing or exchanging equity interests or assets.