Figure 14-3 Suppose a Firm Operating in a Competitive Market Has the Has

question 205

Multiple Choice

Figure 14-3
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-3. The firm will earn positive economic profit if the market price is

• A) above $6.
• B) positive.
• C) $6.
• B) There is no price at which the firm earns positive economic profits.

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Definitions:

Subsidiary Entity

A company that is controlled by another company, often referred to as the parent company, through ownership of more than half of the subsidiary's voting stock.

Parent Entity

A business that controls one or more subsidiary companies.

Deferred Tax Asset

A financial item on a company's balance sheet that reduces future tax liabilities due to deductible temporary differences, losses, or credits.

Unrealised Profit

Profit that results from an increase in value of an asset that has not yet been sold and thus has not generated actual cash inflow.