Table 14-8 Suppose That a Firm in a Competitive Market Faces the Faces

question 601

Multiple Choice

Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs:
-Refer to Table 14-8. In order to maximize profits, the firm will produce

• A)1 unit of output because marginal cost is minimized.
• B)4 units of output because marginal revenue exceeds marginal cost.
• C)5 units of output because marginal revenue equals marginal cost.
• D)7 units of output because total revenue is maximized.

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Definitions:

Sales Returns and Allowances

Reductions in sales revenue for returned goods or for allowances given to customers for defective or unsatisfactory merchandise.

Gross Profit

The difference between the revenue a company earns from selling goods or services and the cost of goods sold.

Financial Statements

Reports that provide an overview of a company's financial condition, including the balance sheet, income statement, and statement of cash flows.

Cash Discount

A deduction from the stated price of goods or services offered to buyers as an incentive for early payment.