Which Would Indicate That a Firm Is Operating Under Conditions

question 15

Multiple Choice

Which would indicate that a firm is operating under conditions of pure competition and is being productively efficient?

• A) It is making economic profits in the long run.
• B) Marginal cost equals average variable cost.
• C) It produces at the minimum average total cost.
• D) Its marginal revenue is less than average revenue.

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Definitions:

Nonparticipating

Typically refers to insurance policies or preferred stock where the holders do not have the right to share in certain dividends beyond the specified rate or in the surplus assets.

Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its shareholders.

Paid-In Capital

Funds raised by a company from investors through the issuance of stock, excluding any amounts derived from retained earnings.

Fair Market Value

The price that property would sell for on the open market between a willing buyer and a willing seller.