In the Long Run, a Firm Will Exit a Competitive

question 10

Multiple Choice

In the long run, a firm will exit a competitive industry if

• A)total revenue exceeds total cost.
• B)the price exceeds average total cost.
• C)average total cost exceeds the price.
• D)Both a and b are correct.

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Definitions:

Interim Reporting

The financial reporting on a company's activities during a portion of the fiscal year, such as quarterly or semi-annual reports.

Inventory Procedures

Established methods for managing and controlling inventory levels, valuation, and turnover.

Gross Profit Method

An inventory valuation technique estimating the cost of goods sold and the ending inventory, based on the gross profit margin.

LIFO Liquidations

A situation where older inventory, costed at historical prices, is sold, potentially leading to an inflated profit margin due to lower cost of goods sold.