A Perfectly Competitive Firm Is Currently Producing Where Price Is

question 125

Multiple Choice

A perfectly competitive firm is currently producing where price is $8 and both marginal cost and average variable cost are $9.To maximize profit or minimize loss in the short run, this firm should

• A)raise its price
• B)increase its output
• C)reduce its output
• D)lower its price
• E)shut down

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Definitions:

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal amount per period.

Income Tax Expense

The cost incurred by a business or individual due to income tax, reflected as an expense on the income statement.

Capital Budgeting

The process by which a business evaluates and plans for significant investments in projects or long-term assets.

Straight-Line Depreciation

A technique of spreading the expense of an asset evenly across its lifespan to calculate depreciation.