CFA Practice Question

There are 539 practice questions for this study session.

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??
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