If Total Revenue Exceeds Fixed Cost, a Firm

question 143

Multiple Choice

If total revenue exceeds fixed cost, a firm

• A)should produce in the short run.
• B)has covered its variable cost.
• C)is making short-run profits.
• D)may or may not produce in the short run, depending on whether total revenue covers variable cost.

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Definitions:

Correlation

A statistical measure that describes the extent to which two variables move in relation to each other, indicating the strength and direction of their relationship.

Optimal Risky Portfolio

An investment portfolio that aims to achieve the highest possible return for a given level of risk.

Capital Market Line

A line used in the Capital Asset Pricing Model to illustrate the rates of return for efficient portfolios subject to the risk (measured by standard deviation) compared to the risk-free rate of return.

Efficient Frontier

Efficient Frontier is a concept in modern portfolio theory that refers to a set of investment portfolios that offer the highest expected return for a given level of risk.