Figure 14-1 Suppose That a Firm in a Competitive Market Has the Has

question 457

Multiple Choice

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves:
-Refer to Figure 14-1. If the market price is $6.30, the firm will earn

• A)positive economic profits in the short run.
• B)negative economic profits in the short run but remain in business.
• C)negative economic profits and shut down.
• D)zero economic profits in the short run.

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Definitions:

Physical Inventory

The process of counting and verifying the actual quantities of physical merchandise or assets present in a store or warehouse.

Inventory Costing Methods

Inventory costing methods are accounting principles used to value inventory, including first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average cost.

Net Income

A company's remaining earnings after deducting all expenses and taxes from its revenue.

FIFO Method

An inventory valuation method that assumes the first items placed in inventory are the first sold.