When Firms in a Competitive Market Have Different Costs, It

question 63

Multiple Choice

When firms in a competitive market have different costs, it is likely that

• A)free entry and exit in the market will be violated.
• B)the market will no longer be considered competitive.
• C)long-run market supply will be downward sloping.
• D)some firms will earn positive economic profits in the long run.

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Definitions:

Compounded Quarterly

Interest calculated on an investment or loan on a quarterly basis where the interest is added to the principal, resulting in interest on interest for the next quarter.

Compounded Monthly

Interest calculated on the initial principal and also on the accumulated interest of previous periods, with the process happening every month.

Compounded Semi-annually

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods, applied twice a year.

Equivalent Cash

A term typically used to describe a sum of money that has the same value as another form of financial instrument or asset.