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

question 104

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, but economic profits are zero.
• B) economic profits must be positive.
• C) other firms will exit the market.
• D) firms will exit the market.

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Definitions:

Dividend Policy

The strategy a company uses to decide how much it will pay out to shareholders in dividends.

Legal Requirements

Mandates established by law that must be followed by individuals, organizations, or businesses.

Property Dividend

A dividend paid to shareholders in the form of assets other than cash, typically securities or physical assets owned by the company.

Bonds

Fixed-income investments representing a loan made by an investor to a borrower, often corporate or governmental.