A Firm Will Expand the Amount of Output It Produces

question 265

Multiple Choice

A firm will expand the amount of output it produces as long as its

• A) average total revenue exceeds its average total cost.
• B) average total revenue exceeds its average variable cost.
• C) marginal cost exceeds its marginal revenue.
• D) marginal revenue exceeds its marginal cost.

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Definitions:

Additional Paid-in Capital

The amount paid by investors for shares above the par value, reflecting excess funds received over the stated capital.

Common Stock Par Value

A nominal value assigned to common stock shares, indicating the minimum price at which the shares can be issued.

Warrant Attached

An option issued by a company that gives the holder the right to purchase the company’s stock at a specific price before expiration.

Ex-rights

Denotes a security that is trading without the right to receive the most recently announced rights offering.