In a Market That Is Characterized by Free Entry and Exit

question 41

True/False

In a market that is characterized by free entry and exit, profit serves the function of drawing new firms into the industry when it is greater than normal and causing some firms to leave when it is less than normal.

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Definitions:

Par Value

The nominal or face value of a security as indicated by the issuer.

Liabilities

Financial obligations or debts owed by a business to another entity, payable in the future.

Debt-To-Equity Ratio

The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities; also known as shareholders' equity.