Which Situation Would Indicate That a Firm Is Operating in the Long

question 132

Multiple Choice

Which situation would indicate that a firm is operating in the long run?

• A) the average total costs exceed average fixed costs
• B) variable cost equals total cost
• C) the marginal cost rises above the average total cost curve
• D) both the average variable and average total cost curves are rising

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the available capital for day-to-day operations.

Company

A legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise.

Earnings Per Share

A financial metric that divides a company’s net income by the number of outstanding shares, indicating the profit earned per share of stock.

Price-Earnings Ratio

A financial indicator that evaluates the relationship between a company’s current stock price and its earnings per share.