When a Perfectly Competitive Firm Finds That Its Market Price

question 244

Multiple Choice

When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell

• A)the output where marginal revenue equals marginal cost.
• B)any positive output the entrepreneur decides upon because all of it can be sold.
• C)nothing at all; the firm shuts down.
• D)the output where average total cost equals price.

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Definitions:

Note Payable

A written promise to pay a specific sum of money, on demand or at a set time, to the holder of the note.

Maturity Value

The amount that will be paid to the holder of a financial instrument at its maturity date, including principal and any remaining interest.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its interest payments on outstanding debt.

Operating Expenses

The ongoing costs for running a business, excluding the cost of goods sold, such as rent, utilities, and salaries.