-In the Above Figure, at a Price of $4 Per

question 405

Multiple Choice

-In the above figure, at a price of $4 per unit, a profit-maximizing perfectly competitive firm will

• A) shut down because its total revenue is less than its variable costs.
• B) incur an economic loss.
• C) produce 5 units.
• D) Both answers A and B are correct.

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Definitions:

Receivables Turnover Ratio

A financial metric that measures how efficiently a company collects on the credit it extends to customers by comparing net credit sales to average accounts receivable.

Profit Margin

The percentage of revenue that remains as profit after all expenses are deducted from sales.

Net Income

Net Income is the total earnings of a company after all expenses and taxes have been deducted from total revenue.

Payout Ratio

The proportion of earnings paid out as dividends to shareholders, often expressed as a percentage.