Consider the Total Cost and Revenue Curves Shown Below,for Two

question 34

Multiple Choice

Consider the total cost and revenue curves shown below,for two perfectly competitive firms,Firm A and Firm B. FIGURE 9-4
-Refer to Figure 9-4.If both Firms A and B are producing a level of output such that the slope of the TC curve is equal to the slope of the TR curve,

• A)then MC = MR and the firm is maximizing profit (or minimizing losses).
• B)then the ATC is at a minimum and the firm is maximizing profits.
• C)then both firms are suffering losses because the distance between TR and TC is the smallest.
• D)then both firms are earning positive economic profits because the distance between TR and TC is the greatest.
• E)then MC = MR but the firm may not be maximizing its profits.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members from the company's earnings, distributed among shareholders.

Acquisition Date

The exact date on which the acquirer effectively gains control over the acquiree in a business combination.

Impairment Loss

A charge recorded when the carrying amount of an asset exceeds its recoverable amount.

Carrying Amounts

The value at which an asset is recognized on the balance sheet, after deducting accumulated depreciation or amortization.