The Following Figure Shows the Cost Curves of a Firm

question 6

Multiple Choice

The following figure shows the cost curves of a firm producing good X.

-Refer to Figure. The area EFGH is:

• A)the loss incurred by the firm when market price is $3.5.
• B)the profit earned by the firm when the market price is $3.5.
• C)the loss incurred by the firm when the market price is $5.
• D)the revenue earned by the firm when the market price is $5.

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Definitions:

Liability

Any financial debt or obligation that a company owes, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Owner's Equity

The residual interest in the assets of a business after deducting liabilities, representing the ownership interest of shareholders in a company.

Balance Sheet

A financial statement that presents a company’s financial position, showing assets, liabilities, and equity at a specific point in time.

Bookkeeper

A person responsible for recording the financial transactions and maintaining the financial records of a business.