A Firm That Maximizes Profits Also

question 107

Multiple Choice

A firm that maximizes profits also

• A) is inefficient.
• B) cuts corners in production processes so that its products are made too cheaply.
• C) uses the least-cost combination of resources.
• D) pays input prices lower than other firms do.

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Definitions:

Distribution

The payment of dividends or assets to shareholders or partners from a corporation, partnership, or another type of entity.

Partnership

A type of business structure where two or more people share ownership, as well as the responsibility for managing the business and the income or losses it generates.

Ordinary Income

Income earned through salaries, wages, commissions, and interest, subject to standard tax rates.

Long-term Capital Gains

Profit from the sale of an asset held for more than one year, typically taxed at a lower rate than ordinary income.