Profit-Maximizing Firms Enter a Competitive Market When, for Existing Firms

question 45

Multiple Choice

Profit-maximizing firms enter a competitive market when, for existing firms in that market,

• A) total revenue exceeds fixed costs.
• B) total revenue exceeds total variable costs.
• C) average total cost exceeds average revenue.
• D) price exceeds average total cost.

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Definitions:

Physical Substance

The tangible aspect of assets, implying that they have a real, palpable presence.

Return On Assets

ROA, also known as Return on Assets, quantifies the efficiency with which a company uses its assets to generate net income, serving as an indicator of managerial effectiveness.

Total Assets

The sum of all resources owned by a company, valued in monetary terms.

Return on Assets

A profitability ratio that indicates how efficiently a company uses its assets to generate profit, calculated by dividing net income by total assets.