Which of the Following Statements Is True

question 1

Multiple Choice

Which of the following statements is true?

• A)Monopolistic competitive firms will earn economic profits in the long run because of their ability to control the price of the product.
• B)Monopolistic competitive firms that earn economic profits in the short run commonly will find their profits competed away in the long run.
• C)Monopolistic competitive firms will earn zero economic profits in both the short and the long run.
• D)Monopolistic competitive firms must earn economic profits in the long run, or they will shut down.
• E)Monopolistic competitive firms must earn economic profits in the short run, or they will shut down.

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Definitions:

Impairment Loss

The amount by which the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, leading to a reduction in value on the balance sheet.

Contingent Rent

Rent payments that are not fixed but instead vary according to a future event or condition, such as sales exceeding a certain amount.

IAS 34

International Accounting Standard 34, providing guidelines on interim financial reporting to ensure timely and reliable disclosures.

Annual Maintenance

Routine or regular maintenance carried out on equipment or facilities to ensure their efficient operation and to prevent breakdown or failure.