Perfectly Competitive Firms Cannot Individually Affect Market Price Because

question 70

Multiple Choice

Perfectly competitive firms cannot individually affect market price because

• A)There is an infinite demand for their goods.
• B)Demand is perfectly inelastic for their goods.
• C)There are many firms,none of which has a significant share of total output.

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Definitions:

Cost of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and satisfy its investors.

Leveraged Value

Utilizing a range of financial tools or leveraging debt to amplify the possible gains from an investment.

Capital Structures

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, constituting how a firm finances its overall operations and growth.

Tax Shelters

Investment strategies or financial arrangements used to minimize tax liabilities, often by deferring or reducing taxable income.