In the Short Run,a Perfectly Competitive Firm Will Shut Down

question 192

Multiple Choice

In the short run,a perfectly competitive firm will shut down if

• A)its total costs exceed its revenues.
• B)its total variable costs exceed its revenues.
• C)its total fixed costs exceed its revenues.
• D)it can't earn a positive economic profit.

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Definitions:

External Equity Financing

This term refers to the process through which a company raises capital by selling its shares to external investors, outside the existing shareholders or company insiders.

Internal Growth Rate

The maximum growth rate a firm can achieve without external financing, based on reinvestment of its own earnings.

Financial Planning

The process of estimating the capital required and determining its competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise.

Financing

The process of supplying capital for company operations, acquisitions, or investments.