Table 14-9 Suppose That a Firm in a Competitive Market Faces the Faces

question 108

Multiple Choice

Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:
-Refer to Table 14-9. If the firm's marginal cost is $5, it should

• A)reduce fixed costs by lowering production.
• B)increase production to maximize profit.
• C)decrease production to maximize profit.
• D)maintain its current level of production to maximize profit.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.

Gross Margin Percentage

A financial metric that measures the difference between revenue and the cost of goods sold, divided by revenue, expressed as a percentage; it shows the proportion of money available to cover other expenses and profit.

Return On Total Assets

A financial ratio that measures the profitability of a company relative to its total assets, indicating how effectively a company is using its assets to generate earnings.

Long-Term Debt

Borrowings and financial obligations that are due for repayment in a period exceeding one year.