In Long-Run Competitive Equilibrium P = SRATC, Because If P

question 28

Multiple Choice

In long-run competitive equilibrium P = SRATC, because if P > SRATC

• A)losses in the industry would cause some existing firms to exit the industry.
• B)positive economic profit would attract firms to the industry in order to obtain the profits.
• C)firms would not be producing the quantity of output at which MR = MC.
• D)firms would not be covering total fixed costs.
• E)none of the above

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Definitions:

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period and must be paid out before common dividends can be distributed.

Par Common Stock

The value designated to shares of common stock in the articles of incorporation, known as the nominal or face value.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of the company remains unchanged.

Market Value

The present cost at which a service or asset is available for purchasing or selling on the open market.