If Firms Are Producing at a Profit-Maximizing Level of Output

question 51

Multiple Choice

If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:

• A)accounting profits must be negative.
• B)economic profits must be zero.
• C)other firms will enter the market.
• D)firms will exit the market.

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Definitions:

Bullwhip Measure

A metric that quantifies the increase in variability or fluctuations in order and inventory levels observed as one moves up the supply chain from retailers towards manufacturers.

Supply Chain

The network of manufacturers, suppliers, and logistics providers involved in producing and delivering a product to the end user.

Variance

A statistical measure of the dispersion showing how much the values in a data set diverge from the mean or expected value.

Wholesaler

A person or company that buys goods in large quantities from producers and sells them in smaller quantities to retailers or other wholesalers.