Which of the Following Statements Is TRUE

question 89

Multiple Choice

Which of the following statements is TRUE?

• A) The presence of positive economic profit in a perfectly competitive market is consistent with the characteristics of a long-run competitive equilibrium.
• B) When firms in a perfectly competitive market incur economic losses, some will exit in the long run, thereby shifting the industry supply curve rightward.
• C) If a profit-maximizing firm in a perfectly competitive market is making an economic profit, then it must be producing at a level of output where price is greater than average total cost.
• D) If a profit-maximizing firm in a perfectly competitive market is incurring an economic loss, then it must be producing at a level of output where price is greater than average total cost.

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Definitions:

Earnings Retention

The portion of a company's profits that is not distributed to shareholders as dividends but is kept by the company to reinvest in its core business or to pay debt.

Annual Dividend

represents the total dividend payment a company distributes to its shareholders within a given fiscal year.

Market Value

The cost for buying or selling assets or services in the marketplace at this time.

Constant Rate

A fixed percentage rate applied over a certain period which does not change.