Consider the Following Characteristics of a Particular Industry

question 91

Multiple Choice

Consider the following characteristics of a particular industry:
- the firms in the industry are maximizing their joint profits
- entry of new firms is restricted This industry is likely to be

• A) one where each firm has limited market power.
• B) a monopoly.
• C) perfectly competitive.
• D) monopolistically competitive.
• E) a cartel.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Required Return

The minimum amount of profit an investor expects to receive on an investment, accounting for various levels of risk.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, which allocates an equal amount of depreciation each year over the asset's useful life.

Salvage Value

The forecasted salvage value of an asset when it's no longer useful, applied in determining depreciation amounts.