If a Firm Is Not Covering the Cost of All

question 540

Multiple Choice

If a firm is not covering the cost of all resources employed by the firm (including the opportunity cost of resources owned by the firm) , it will generally

• A) go out of business in the long run.
• B) remain in business as long as the current conditions are unchanged.
• C) experience an increase in its stock price because investors will be attracted to it.
• D) attempt to expand the size of its operation.

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Definitions:

Privity Of Contract

A principle that contract terms apply only to the actual parties to the contract

Privity Of Contract

A doctrine in contract law that states only the parties involved in the contract have the right to sue or be sued on its terms.

Lease

A contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset for a specified period of time.

Agency

In legal terms, an agency refers to a relationship in which one party, known as the agent, is authorized to act on behalf of another party, known as the principal, in business transactions with third parties.