Use the Following to Answer Question

question 127

Multiple Choice

Use the following to answer question:
Figure: Comparing Long-Run Equilibriums
-(Figure: Comparing Long-Run Equilibriums) Use Figure: Comparing Long-Run Equilibriums.Which statement is TRUE?

• A)Firms in the market structure shown in panel (a)cannot have profits in the long run,but those in panel (b)can.
• B)Both panels show markets that have few interdependent firms.
• C)Both panels show markets that produce identical products.
• D)Both panels show markets that have many firms.

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Definitions:

Break-Even Time

The period it takes for a business or project to recover its costs, reaching a financial break-even point.

Payback Period

The payback period is the time it takes for an investment to generate cash flows sufficient to recover its initial cost.

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time, used to assess the profitability of an investment.

Payback Period Method

A simple calculation that divides the initial investment by the annual cash inflows to determine how long it will take to recoup the initial investment.