For a Perfectly Competitive Firm, the Shutdown Point Is the

question 446

Multiple Choice

For a perfectly competitive firm, the shutdown point is the

• A) amount of output at which price equals minimum average variable cost.
• B) amount of output at which price equals minimum average total cost.
• C) price at which economic profit is zero.
• D) price at which total opportunity cost is zero.

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Definitions:

Gross Profit

The financial gain made after subtracting the cost of goods sold from the total revenue generated from sales.

Accounts Receivable Turnover

A financial ratio that measures how frequently a company collects its average accounts receivable balance in a period.

Days' Sales

A measure of the average number of days it takes a company to collect revenue after a sale has been made, often used in understanding liquidity.

Average Accounts Receivable

The average amount of money owed to a company by its customers over a specific period.