Assume for a Competitive Firm That MC = AVC at $12

question 124

Multiple Choice

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will

• A)realize a profit of $4 per unit of output.
• B)maximize its profit by producing in the short run.
• C)minimize its losses by producing in the short run.
• D)shut down in the short run.

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Definitions:

Interest Payable

A liability account representing the amount of interest expense that has been incurred but not yet paid.

Accrued Expense

Expenses that have been incurred but not yet paid or recorded in the financial statements, reflecting obligations that a business has taken on.

Net Income

The total revenue of a company minus all expenses and taxes; a measure of the company's profitability over a specific time period.

Liabilities

Financial obligations or debts that a company owes to others, reflected on the balance sheet.