If There Is a Decrease in Industry Supply While the Industry

question 226

Multiple Choice

If there is a decrease in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning losses will see its losses

• A) increase.
• B) not change.
• C) decrease.
• D) impossible to determine

---

Definitions:

Installation Costs

Expenses associated with putting fixed assets into operation, including the costs of setting up, assembling, and installing the assets.

Residual Value

The estimated amount that an asset is expected to realize at the end of its useful life.

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation expense for an asset over its useful life.

Depreciation Rate

The rate at which an asset is depreciated over a specified period, often expressed as a percentage of its original cost.