When a Profit-Maximizing Firm in a Competitive Market Has Zero

question 218

Multiple Choice

When a profit-maximizing firm in a competitive market has zero economic profit,accounting profit

• A)is negative (accounting losses).
• B)is positive.
• C)is also zero.
• D)could be positive, negative or zero.

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Definitions:

Stockholders' Equity

The value remaining in a company after liabilities are deducted from total assets; also known as shareholder's equity.

Paid-in Capital

Refers to the funds raised by a company through the issuance of shares. This capital is provided by shareholders in exchange for equity in the company.

Preferred Stock

Preferred stock is a type of stock that grants holders certain priorities over common stock, including dividends and asset liquidation, often without voting rights.

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.