Assume That a Firm Is Producing an Output Level Such

question 69

Multiple Choice

Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that

• A) the firm is earning positive economic profit.
• B) the firm is earning normal profit.
• C) the firm is breaking even.
• D) total cost exceeds total revenue by the maximum amount.
• E) as long as the firm is covering all of its variable costs, it is producing at the optimal level of output.

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Definitions:

Finished Goods Inventory

Products that have completed the manufacturing process but have not yet been sold or distributed to customers.

Expected Units Sold

The number of units of a product that a company anticipates selling in a particular period based on market research and sales forecasts.

Direct Materials Budget

An estimation of the quantity and cost of direct materials necessary for production, matching the production budget.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.