If a Business Firm Is Not Operating at the Point

question 117

Multiple Choice

If a business firm is not operating at the point where MR = MC, then:

• A) it should shut down.
• B) it will incur losses.
• C) it cannot be earning a profit.
• D) its profit is zero.
• E) it is not earning the maximum potential profit.

---

Definitions:

Interest Rate

The percentage charged on a loan or paid on savings over a certain period of time, essentially the cost of borrowing money or the reward for saving.

Optimal Choice

The most efficient, advantageous selection or decision based on available information and constraints.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute the consumption of one good for another.

Interest Rate

The remuneration, depicted as a fraction of the principal, that a lender exacts from a borrower for asset utilization.