If a Competitive Firm Is Selling 900 Units of Its

question 50

Multiple Choice

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

• A)its total cost is more than $9,000.
• B)its marginal revenue is less than $10.
• C)its average total cost is less than $10.
• D)the firm cannot be a competitive firm because competitive firms cannot earn positive profits.

---

Definitions:

Direct Financing Leases

A type of lease where the lessor accounts for the asset as a receivable at an amount equal to the net investment in the lease.

Sales-Type Leases

Leases where the lessor recognizes immediate profit on the sale, in addition to interest revenue over the lease term, similar to a financial purchase.

Direct Financing Lease

A type of lease arrangement where the lessor purchases the asset for the lessee and finances it, with lease payments designed to cover the cost and provide a return on investment.