If a Firm Is Currently in Short-Run Equilibrium Earning a Profit,what

question 25

Multiple Choice

If a firm is currently in short-run equilibrium earning a profit,what impact will a lump-sum tax have on its production decision?

• A) The firm will decrease output to earn a higher profit.
• B) The firm will increase output but earn a lower profit.
• C) The firm will not change output but earn a lower profit.
• D) The firm will not change output and earn a higher profit.

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Definitions:

Financing Activities

Transactions and events where cash is raised from or repaid to investors, such as issuing shares or borrowing.

Direct Approach

A method in financial statement reporting that presents major classes of operating cash receipts and payments.

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments, reflecting how cash is spent on investments to grow or maintain the business.