In the Long Run, If Price Is Greater Than Average

question 5

Multiple Choice

In the long run, if price is greater than average total cost in an industry, then

• A)some firms leave the industry.
• B)some firms are attracted to the industry.
• C)all firms leave the industry.
• D)there is no incentive for any firm to enter or leave the industry.
• E)the industry disappears.

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Definitions:

Net Income

Net Income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, indicating the company's financial health.

Prepaid Expenses

Payments made for goods or services that will be received and used in the future, treated as assets on a balance sheet until used.

Financing Activity

This refers to the transactions and events that involve raising capital and repaying investors, such as issuing equity or debt.

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its shareholders.