If the Price Exceeds the Average Variable Cost, by Producing

question 269

Multiple Choice

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

• A) earn an economic profit.
• B) not suffer any losses.
• C) earn the largest profit possible.
• D) survive in the long run.

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Definitions:

AASB 10

An Australian Accounting Standards Board standard that sets out the principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.

Consolidated Financial Statements

Financial statements that combine the financial information of a parent company and its subsidiaries into one document.

Non-controlling Interest

A minority ownership in a subsidiary that is not large enough to exert control over the company, reflected within the equity section of the consolidated financial statements.

Consolidated Equity

The total amount of owners' equity represented in a consolidated financial statement, which reflects the combine equity of a parent company and its subsidiaries.