In a Competitive Industry, Which of the Following Cannot Be

question 6

Multiple Choice

In a competitive industry, which of the following cannot be true for a firm in the long run?

• A)Price equals marginal cost.
• B)Profits are maximized.
• C)The firm takes market price as given.
• D)Economic profits equal zero.
• E)Price equals average variable cost.

Recognize the methods for detecting multicollinearity, including the examination of correlation matrices and standard errors.

Comprehend the impact of multicollinearity on the precision of estimates and predictions in regression models.

Understand the role of dummy variables in representing qualitative predictors within regression models.

Learn how stepwise regression procedures can be used to address multicollinearity and model selection.

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Definitions:

Parity

In finance, parity refers to the equality of two or more securities, rates, or related financial instruments in terms of price or value.

Absolute Purchasing Power Parity

A theory that suggests that prices of goods and services should equalize across countries over time when measured in a common currency, due to exchange rate changes.

Silver

A precious metal used for currency, jewelry, and industrial applications.

Multinational Firm

A business entity that operates in multiple countries beyond its home country, engaging in international trade or investment.