At an Output Level Above the Profit-Maximizing One for a Perfectly

question 12

Multiple Choice

At an output level above the profit-maximizing one for a perfectly competitive firm,a reduction in output will:

• A)reduce total revenue more than total cost.
• B)reduce total cost more than total revenue.
• C)increase total revenue more than total cost.
• D)increase total cost more than total revenue.
• E)decrease total revenue and total cost by the same amount.

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Definitions:

Expected Dividend

The forecasted payment of dividends to shareholders, based on a company’s past dividend history and future earnings projections.

Semistrong Efficient

This term refers to a form of market efficiency that assumes all publicly available information is already reflected in stock prices, including historical and fundamental data.

Strong-Form Efficient

A state of market efficiency where all information, public and private, is accounted for in stock prices.

SML

Security Market Line, a graphical representation that shows the expected return of a security or portfolio as a function of its beta (systematic risk).