The Figure Given Below Shows the Revenue and Cost Curves

question 21

Multiple Choice

The figure given below shows the revenue and cost curves of a perfectly competitive firm. Figure 9.2
MC: Marginal cost curve
MR: Marginal revenue curve
ATC: Average-total-cost curve
AVC: Average-variable-cost curve
-Refer to Figure 9.2.If the marginal-revenue curve would have intersected the average-total-cost curve at the latter's lowest point and the firm maximized profit,then total profit would have been equal to:

• A)$30.
• B)zero.
• C)-$10.
• D)$20.
• E)-$20.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a common set of accounting rules and standards used in the United States for financial reporting.

Detachable Warrants

Warrants issued with another security that can be separated from the security and sold independently.

Convertible Debt

A type of debt instrument that can be converted into a specified number of shares of the issuing company's stock at certain times during its life, usually at the discretion of the debt holder.

Common Stock

Equity securities that represent ownership in a corporation, providing voting rights and potentially dividends to shareholders.