In the Short Run, a Perfectly Competitive Firm

question 371

Multiple Choice

In the short run, a perfectly competitive firm

• A) cannot shut down.
• B) must make zero economic profit.
• C) can make an economic profit, incur an economic loss, or make zero economic profit.
• D) will not incur an economic loss if it shuts down.

Identify and analyze activity and spending variances in performance reports.

Determine how changes in activity levels affect variable costs, fixed costs, and overall budget performance.

Understand the role of cost drivers in budgeting and how they contribute to budget accuracy.

Calculate budgeted costs based on different cost formulas and activity measures.

---

Definitions:

Sum of Differences

The total sum calculated by subtracting each value in a dataset from a specific value (often the mean), used in various statistical computations.

Null Hypothesis

A hypothesis in statistics that proposes no significant difference or effect, serving as the default or starting assumption in hypothesis testing.

Dependent Samples

Pairs of samples where the members are matched or related, often used in experiments to compare two conditions or treatments.

Pretest and Posttest

Assessments administered before and after an intervention or experiment to measure the impact of the intervention.