Competitive Firms That Earn a Loss in the Short Run

question 174

Multiple Choice

Competitive firms that earn a loss in the short run should

• A)shut down if P < AVC.
• B)raise their price.
• C)lower their output.
• D)All of the above are correct.

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Definitions:

Dividend

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.

Historical Constant Growth

A growth rate that assumes a constant rate of increase over time, often used in financial forecasting.

Present Value

Present value is a financial concept that involves determining the current worth of a future sum of money or stream of cash flows given a specific rate of return.

Second Class of Stock

A category of shares that have different rights and privileges than the primary class of stock in a company, often with different voting or dividend rights.