Table 13-11 Suppose That a Firm in a Competitive Market Faces the Faces

question 362

Multiple Choice

Table 13-11
Suppose that a firm in a competitive market faces the following prices and costs:

-Refer to Table 13-11.If the firm is producing 2 units of output,it should

• A) produce more units of output because its marginal revenue is greater than its marginal cost.
• B) fewer units of output because its marginal revenue is less than its marginal cost.
• C) produce more units of output because its marginal revenue is less than its marginal cost.
• D) produce fewer units of output because its marginal revenue is greater than its marginal cost.

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Definitions:

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculating an annual growth rate.

Profitability Index

A fiscal indicator that evaluates an investment's comparative profitability by calculating the ratio of the present value of future cash inflows to the upfront cost of the investment.

Present Value

The immediate worth of a future financial amount or sequences of cash flows, using a specified rate of return for calculation.

Invested Costs

Costs that have already been incurred for a project or investment.