What Happens If a Competitive Firm Is Currently Producing a Level

question 197

Multiple Choice

What happens if a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost

• A)A one-unit increase in output will increase the firm's profit.
• B)A one-unit decrease in output will increase the firm's profit.
• C)Total revenue exceeds total cost.
• D)Total cost exceeds total revenue.

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Definitions:

Accrual

A method of accounting that recognizes revenue and expenses when they are incurred, regardless of when cash transactions occur.

Disclosure

Disclosure involves the act of making new or important information known, especially about the financial or operational state of a company.

Current Assets

Assets that are expected to be converted into cash, sold or consumed within one year or within the normal operating cycle of the business, whichever is longer.

Current Ratio

A financial ratio that indicates how well a company can cover its short-term liabilities with its present assets.