A Purely Competitive Firm Is Precluded from Making Economic Profits

question 86

Multiple Choice

A purely competitive firm is precluded from making economic profits in the long run because

• A)it is a "price taker."
• B)its demand curve is perfectly elastic.
• C)of unimpeded entry to the industry.
• D)it produces a differentiated product.

Define and apply the concept of legal title and its impact on inventory accounting.

Grasp the principles behind inventory counting methods, including the physical count and the gross profit method.

Recognize the implications of inventory management on financial statements, specifically the balance sheet and income statement.

Understand the application of the LIFO and FIFO inventory cost flow assumptions in various inventory systems.

---

Definitions:

Fixed Fee

A pricing structure where the cost of a service or project is agreed upon upfront and not subject to change based on time or resources used.

Cost Reimbursable Contract

A type of contract where the buyer reimburses the seller for all legitimate costs incurred plus a fee representing profit.

Profit

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in maintaining the business.

Punch List

A document listing work that does not conform to contract specifications, needing completion or correction before project finalization.