If a Firm Is Producing Where Price Exceeds Average Variable

question 4

Multiple Choice

If a firm is producing where price exceeds average variable cost, the firm should continue production even though it may incur a loss, since

• A) it is important to show stockholders that the company can turn itself around.
• B) it must adhere to union rules against layoffs.
• C) the loss will quickly revert to a profit.
• D) it can cover its variable costs (payroll, utilities, etc.) and have some funds left over to apply toward paying fixed costs.

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Definitions:

Diastereomer

Stereoisomers that are not mirror images of each other, differing in the spatial arrangement of atoms around one or more asymmetric centers.

Achiral

A term describing molecules that are superimposable on their mirror images, indicating they do not possess handedness or chirality.

Asymmetric Carbons

Carbon atoms bonded to four different groups, resulting in chirality and the potential for molecules to exist as enantiomers.

Enantiomers

Molecules that are mirror images of each other but cannot be superimposed, possessing opposite optical activities.