If a Firm Is Producing an Output Level Greater Than

question 197

Multiple Choice

If a firm is producing an output level greater than the equilibrium output level in a perfectly competitive industry, which statement is FALSE?

• A) Marginal cost will equal price.
• B) Marginal cost will exceed price.
• C) Firms produce more output than what is valued by consumers.
• D) Public interest would have been better off if resources were used to produce a more highly valued product.

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Definitions:

Owner's Equity

The residual interest in the assets of a company after deducting liabilities.

Dividend Policy

A company's approach to distributing profits back to its shareholders either in the form of cash payments or shares of stock.

Firm Value

The total value of a company, determined by its assets, earnings, cash flow, and market perception.