If Price Is Greater Than the Average Variable Cost,a Profit-Maximizing

question 217

Multiple Choice

If price is greater than the average variable cost,a profit-maximizing firm should ________.

• A) contract production until price is equal to marginal cost
• B) expand production until price is equal to marginal cost
• C) contract production until total revenue is equal to total cost
• D) expand production until total revenue is equal to total cost

---

Definitions:

Unrealized Holding

Gains or losses on investments that a company has not yet sold, and therefore, has not realized the cash value from.

Fair Value

An estimate of the market value of an asset or liability based on current market conditions and willing buyer and seller dynamics.

Held-to-Maturity Debt Securities

Financial instruments that a firm has the intent and ability to hold until they mature, recorded at amortized cost.

Marketable Securities

Financial instruments that are easily convertible to cash and are subject to minimal price risk.