Suppose That the Only Maker of a Particular Type of Horse

question 44

Multiple Choice

Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low.The correct analysis of this situation is that

• A)the producer's decision is irrational, since monopolies are not limited by the demand curve
• B)the producer's decision is irrational, since monopolies never go out of business
• C)the producer's decision is irrational, since it could simply raise the price
• D)the price received by the producer was lower than the marginal cost in the long run
• E)the price received by the producer was lower than the average total cost in the long run

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Definitions:

Cash Flows

The inflows and outflows of cash and cash equivalents, reflecting the operational, investing, and financing activities of a business.

Wages and Salaries

Compensation paid to employees for their labor, including hourly pay (wages) and fixed annual or monthly pay (salaries).

Operating Activities

Operating activities involve the core business functions of a company, including production, distribution, and sales, determining cash flow from primary business operations.

Interest Expense

The monetary burden placed on an entity due to borrowing capital over a specified timeframe.