If Firms Are Producing at a Profit-Maximizing Level of Output

question 2

Multiple Choice

If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:

• A)accounting profits must be positive.
• B)economic profits must be positive.
• C)other firms will enter the market.
• D)All of these are true.

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Definitions:

Ownership Interest

A stake or share in an asset or entity, giving the holder a claim to a portion of its value or profits.

Cash Received

Income or revenue received in the form of cash, including physical currency, checks, and digital transfers.

Corporate AMT

The Alternative Minimum Tax for corporations, designed to ensure that profitable companies pay at least a minimum amount of tax.

Average Annual Gross Receipts

The average amount of money received by a business before any deductions over a specified period, typically 3 to 5 years.