Consider a Firm Operating in a Competitive Market

question 491

Multiple Choice

Consider a firm operating in a competitive market. The firm is producing 40 units of output, has an average total cost of production equal to $6, and is earning $240 economic profit in the short run. What is the current market price?

• A)$0
• B)$6
• C)$10
• D)$12

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Definitions:

Trademark

A distinguishable symbol, pattern, or phrase that differentiates the goods or services of a specific origin from those of other sources.

Overvalued

A term used to describe an asset or security whose price is believed to be higher than its intrinsic value.

Consolidated Balance Sheet

A consolidated financial report that shows the assets, liabilities, and shareholders' equity of a parent company along with its subsidiaries as though they are one entity.

Inventory

The components, items in the process of completion, and completed products which form part of a company's assets that are available or will soon be available for sale.