Which of the Following Conditions Is TRUE for a Profit-Maximizing

question 69

Multiple Choice

Which of the following conditions is TRUE for a profit-maximizing firm in a perfectly competitive industry?

• A) MR = TC
• B) ATC = AFC
• C) MR = MC
• D) MC = AVC

Recognize the characteristics and outcomes of different forms of oligopolies.

Understand the calculation and implications of the Herfindahl-Hirschman Index for industry concentration.

Differentiate between the competitive spectrum of oligopolies and perfect competition.

Analyze the pricing and profit differences between oligopolists and perfect competitors.

---

Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital (debt, equity) is proportionately weighted.

Capital Component

Individual sources of funding that make up a company's capital structure, including debt and equity.

Accounts Payable

Accounts Payable is the account showing the amount a company owes to suppliers or vendors for goods or services purchased on credit.

Target Capital Structure

The optimal mix of debt, equity, and other financing sources that a company aims to maintain to fund its operations and growth.