A Firm That Maximizes Profits Also

question 107

Multiple Choice

A firm that maximizes profits also

• A) is inefficient.
• B) cuts corners in production processes so that its products are made too cheaply.
• C) uses the least-cost combination of resources.
• D) pays input prices lower than other firms do.

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Definitions:

Merchandising Company

A business that purchases finished products and sells them to consumers without further processing.

Sunk Cost

Costs that have already been incurred and cannot be recovered or changed.

Alternative

An option or choice among several available in a given situation, often considered when making decisions.

Relevant Range

The span of activity or volume over which the specific assumptions of cost behavior hold true, often considered in budgeting and decision-making.