- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 4. Breakeven Analysis and Shutdown Decision
CFA Practice Question
A price-taking firm CANNOT ______
A. earn economic profits in the short run.
B. sustain economic losses in the long run.
C. produce where marginal costs exceed average costs in the short run.
User Contributed Comments 3
| User | Comment |
|---|---|
| bobert | This is because the firm would leave the market. correct? |
| sevaa1 | Yes. There just simply wouldn't be a long-run, if a price-taker firm was having economic losses (in the short-run). |
| Oksanata | Does it mean that in the short-run firm can produce where MC>ATC?? why would it do that if it's not profit-maximizing?? |