When Competitive Forces in an Industry Are Weak

question 161

Multiple Choice

When competitive forces in an industry are weak,

• A) the absence of competition generally leads to overproduction.
• B) prices may exceed the amount consumers are willing to pay.
• C) the operational efficiency of private firms will be enhanced.
• D) higher prices and less than optimal production may result.

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Definitions:

FASB 13

Accounting standard issued by the Financial Accounting Standards Board related to lease accounting.

Operating Lease

A lease in which the lessee does not effectively acquire ownership of the leased asset. Accounted for as a stream of expense payments on the income statement. No entry is made on the balance sheet to reflect the acquisition of the asset. The most common form of off balance sheet financing. Compare with Financing lease.

Economic Life

The expected period during which an asset remains useful to the average owner.

Face Value

The nominal or dollar value printed on a financial instrument, such as a bond or stock certificate.