A Firm in a Competitive Market Has the Following Cost

question 257

Multiple Choice

A firm in a competitive market has the following cost structure:

If the firm's fixed cost of production is $3,and the market price is $10,how many units should the firm produce to maximize profit?

• A) 1 unit
• B) 2 units
• C) 3 units
• D) 4 units

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Definitions:

Common-Size Financial Statements

These are financial documents where all line items are expressed as a percentage of a specific figure from the statement, facilitating ratio analysis and comparability.

Base Number

A reference point or initial value used in calculations to compare other numbers or for indexing purposes.

Fixed Asset Sales

The disposal of long-term assets owned by a company, such as property, plant, and equipment, usually due to obsolescence, necessity, or acquiring funds.

Financial Ratios

Quantitative measures derived from financial statement analysis used by investors and analysts to assess a company's financial health, performance, and viability.