Consider a Firm in the Long Run That Is Trying

question 56

Multiple Choice

Consider a firm in the long run that is trying to maximize its profits.It should

• A)select the most technically efficient method of production regardless of the level of production.
• B)maximize the marginal product of all factors of production.
• C)charge the highest price.
• D)minimize the cost of producing whatever level of output it chooses.
• E)charge the lowest price possible given the minimum possible cost.

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Definitions:

Sustainable Growth Rate

The maximum growth rate a firm can achieve without having to finance growth with additional equity or debt.

Quebec Firm

Refers to a business organization that is registered or operates in Quebec, Canada, subject to provincial laws and regulations.

Equity Value

The value of a company’s shares; it represents the residual value to shareholders after debts and liabilities have been settled.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without having to increase financial leverage or equity financing.