A Perfectly Competitive Firm Is Maximizing Profits in the Short

question 91

Multiple Choice

A perfectly competitive firm is maximizing profits in the short run. This implies that the firm is earning the most economic profits possible, which

• A) must be positive.
• B) must be either zero or positive.
• C) can be positive, negative, or zero.
• D) exist at the point at which price equals total cost.

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Definitions:

Return on Sales Ratio

A financial metric that measures the portion of a company's revenue that is converted into profit.

Net Income Before Taxes

The profit a company generates after all expenses have been deducted from revenues but before income taxes are subtracted.

Liquidity

The ability of an asset to be converted into cash quickly without losing value.

Asset Management

The method of creating, running, upkeeping, and marketing assets in an economical way.