Which of the Following Statements Is INCORRECT Regarding the Model

question 162

Multiple Choice

Which of the following statements is INCORRECT regarding the model for information products?

• A) Average total costs slope downward, because average variable cost is constant, average fixed cost slopes downward.
• B) The firm maximizes profit by setting the price of its product equal to marginal cost.
• C) Marginal cost equals average variable cost.
• D) In the long run, accounting profit is positive.

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Definitions:

Operating Policies

Guidelines, rules, and procedures established by an organization to govern its operations and decision-making processes.

Asset Revaluation Reserve

An equity account that records increases in the carrying amount of a company's assets, reflecting changes in value over time.

General Reserve

A reserve fund set aside out of profits for the purpose of strengthening the company's financial position and fulfilling future needs or contingencies.