Use the Figure to Answer the Following Question(s)

question 428

Multiple Choice

Use the figure to answer the following question(s) .
Figure 9-5

If the market price in Figure 9-5 fell to $2.50, what should the firm do?

• A) raise its price
• B) shut down and wait for conditions to improve
• C) continue operating in the short run if it expects conditions to improve
• D) go out of business immediately

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Definitions:

Periodic Inventory System

A periodic inventory system is an accounting method where inventory levels and cost of goods sold are determined at specific periods, such as monthly or annually, through a physical count.

Cost of Goods Sold

Cost of Goods Sold (COGS) represents the direct costs attributable to the production of goods sold by a company, including material and labor costs.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership equity.

Net Income

The amount of money a firm earns after deducting all its expenses, taxes, and costs from its total revenue, indicating its profitability during a specific period.