If Price = Marginal Cost at the Output Produced by a Perfectly

question 32

Multiple Choice

If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit, then

• A)marginal revenue is less than price.
• B)average total cost is at a minimum.
• C)total revenue equals total cost.
• D)price exceeds average total cost.

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Definitions:

Maturity Value

The total amount that will be paid to an investor at the maturity date of a debt instrument, including principal and any accrued interest.

Interest

The cost of borrowing money, represented as a percentage of the total amount loaned, or the income earned on deposited funds.

Bank Discount

What the bank charges to hold a note until maturity (Maturity Value – Proceeds).

Discount Period

The window of time during which a payment can be made at a reduced rate.