In the Long Run, a Profit-Maximizing Firm Will Choose to Exit

question 330

Multiple Choice

In the long run, a profit-maximizing firm will choose to exit a market when

• A)average fixed cost is falling.
• B)variable costs exceed sunk costs.
• C)marginal cost exceeds marginal revenue at the current level of production.
• D)total revenue is less than total cost.

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Definitions:

Fixed Cost

A cost that does not change with an increase or decrease in the quantity of goods or services produced or sold.

Accounting Salaries

The wages or salaries paid to employees working in the accounting department, reflecting the cost associated with managing financial records and reports.

Fixed Cost

Expenses that do not change with the level of production or sales activities, such as rent, salaries, and insurance premiums.

Screen Printing

A printing technique where a mesh is used to transfer ink onto a substrate, except in areas made impermeable to the ink by a blocking stencil.