Suppose Life Is Discovered on Mars and That It Turns

question 132

Multiple Choice

Suppose life is discovered on Mars and that it turns out to be quite sophisticated. In fact, perfect competition prevails everywhere on the planet. Which of the following characteristics of Martian firms are we likely to observe?

• A) None of them ever experiences diminishing marginal returns.
• B) They all try to operate where price equals average variable cost.
• C) They all try to operate where price equals total cost.
• D) They are all price takers.

---

Definitions:

Adjustment

Amendments made to accounts or financial statements to correct errors, update values, or reallocate revenues and expenses.

Credit Sales

Transactions where goods or services are sold to a customer with an agreement to pay at a later date, typically allowing a specific period before payment is due.

Bad Debts

Bad debts are amounts owed to a company that are no longer considered collectible, leading to their recognition as a loss.

Adjustment

An entry in accounting made to correct, alter, or update the financial records and statements of a company.