Suppose ABC Corp

question 5

Multiple Choice

Suppose ABC Corp.is a firm producing newsprint in a perfectly competitive industry.Its output is 1500 tonnes per month,the marginal cost of the last tonne produced is $710,and the average revenue per tonne is $620.In the short run,this firm should

• A)reduce output.
• B)increase output until average revenue is equal to marginal cost.
• C)increase output until marginal revenue is equal to marginal cost.
• D)definitely shut down.
• E)The price of the product is not known,so it is not possible to determine.

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Definitions:

Cash Account

An account that records cash transactions, including receipts and payments of cash.

Ledger Account

A record in the ledger that contains the financial information of a specific account, showing all the changes in that account.

Balance Column

A column in ledgers or financial statements showing the difference between debits and credits.

Account Entry

An accounting record that logs a financial transaction in the books of accounts, impacting the balance sheet and/or income statement.