Use the Following Information for Questions

question 11

Multiple Choice

Use the following information for questions
Cooney Corporation had $275,000 in current assets and $105,000 in current liabilities before borrowing $75,000 from the bank for a 6-month period.
-What effect did the borrowing transaction have on the amount of Cooney's working capital?

• A)No effect
• B)$75,000 increase
• C)$105,000 increase
• D)$75,000 decrease

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Definitions:

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and freedom of entry and exit, leading to price takers.

Barriers To Entry

Economic, procedural, or regulatory obstacles that prevent or deter new competitors from easily entering an industry or area of business.

Absolute Market Power

The ability of a single economic actor, or a group of actors, to control market prices, output, and/or the market entry of new competitors without external interference.

Barriers To Entry

Barriers to entry are obstacles that make it difficult for new firms to enter a market, including high startup costs, regulatory hurdles, and established competition.