Scenario 14-2 Assume a Certain Firm Is Producing Q = 1,000 Units

question 241

Multiple Choice

Scenario 14-2
Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit.
-Refer to Scenario 14-2. To maximize its profit, the firm should

• A)increase its output.
• B)continue to produce 1,000 units.
• C)decrease its output but continue to produce.
• D)shut down.

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Definitions:

Retained Earnings

The portion of a company's profit that is held or retained and saved for future use, reinvestment, or to pay debt, rather than being distributed to shareholders as dividends.

Interest Expense

The cost incurred by an entity for borrowed funds, typically expressed as a yearly rate.

Net New Equity

Refers to the amount of money raised by a company through the issuance of new shares, subtracting any repurchases of existing shares.

Earnings Before Interest And Taxes

This represents the company’s earnings before the deduction of interest and tax expenses.