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.

---

Definitions:

GICs

Guaranteed Investment Certificates, a type of Canadian investment that offers a fixed return rate over a predetermined period.

Simple Interest

Interest determined exclusively on the original amount, or on the remaining amount of the principal that is not yet paid.

Financial Position

A snapshot of what a company owns and owes at a specific point in time, encompassing assets, liabilities, and equity.

Promissory Note

A Promissory Note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.