If the Price a Firm Charges in a Perfectly Competitive

question 202

Multiple Choice

If the price a firm charges in a perfectly competitive industry is less than average total cost

• A) the firm is earning positive economic profit.
• B) the firm is earning zero economic profit.
• C) the firm is earning negative economic profit.
• D) It is not possible to determine anything about profits.

---

Definitions:

Redeemed

In financial terms, to exchange a financial instrument like a bond or coupon for its value in cash or goods; also refers to utilizing a reward or benefit.

Compounded Semi-Annually

Refers to the process of applying interest to a principal sum twice a year, leading to interest being earned on previously earned interest.

Lump Sum Payment

A single payment made at a particular time, as opposed to multiple payments made over time.

Compounded Monthly

A financial term describing the process where interest earned is added to the principal each month, leading to increased interest in the next month.