When Firms Earn Above Normal Rates of Return

question 361

Multiple Choice

When firms earn above normal rates of return

• A) they are able to raise their prices to increase their profits.
• B) they are earning positive profits and new firms are likely to enter the industry.
• C) they tend to leave the industry and seek profits elsewhere.
• D) they are still breaking even economically.

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Definitions:

Limited Partnership

A business arrangement where at least one partner is a general partner who takes on unlimited liability, while others are limited partners whose liability is restricted to their investment in the partnership.

Federal Law

Laws that have been enacted by the national government of a country and which apply to the entire nation, superseding local or state laws where conflicts occur.

International Commerce

Refers to the exchange of goods, services, and capital across international borders or territories.

Certificate of Limited Partnership

A legal document filed with a state governmental body that officially recognizes a limited partnership's existence.