When a Firm Has an Accounting Profit That Is Negative

question 421

Multiple Choice

When a firm has an accounting profit that is negative, it

• A) will never produce output, even in the short run.
• B) may still have economic profit.
• C) has total revenue that is less than total cost.
• D) cannot be producing where price equals marginal cost.

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Definitions:

Selling Expenses

Expenses incurred directly or indirectly in making a sale, such as commissions, advertising costs, and shipping expenses.

Disallowed Loss

A loss that cannot be claimed for tax deduction purposes because it does not meet certain IRS criteria.

Capital Gains

The profit from the sale of assets or investments when the selling price exceeds the original purchase price.

Adjusted Gross Income

An individual's total gross income minus specific deductions. It's used as the basis for calculating taxable income.