In the Long Run, New Firms Can Enter an Industry

question 41

Multiple Choice

In the long run, new firms can enter an industry and so the supply elasticity tends to be:

• A) more elastic than in the short run.
• B) less elastic than in the short run.
• C) perfectly elastic.
• D) perfectly inelastic.

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Definitions:

Premium

Premium can refer to the amount paid for insurance coverage in excess of the face value or to the additional amount paid over the nominal or par value of a security.

Operating Line of Credit

A flexible loan from a bank that allows a business to borrow up to a certain limit to support its operational expenses.

Negative Cash Balance

A scenario where a company's cash account has a deficit, indicating that it has issued checks in excess of its actual cash available.

Statement of Financial Position

A financial report that provides a snapshot of an entity’s assets, liabilities, and equity at a specific point in time; also known as a balance sheet.