In a Perfectly Competitive Market That Is in Long- Run

question 141

Multiple Choice

In a perfectly competitive market that is in long- run equilibrium, a rightward shift in the market demand curve results in

• A) firms leaving the industry in the long run.
• B) the firms' economic profits falling in the short run.
• C) the price falling in the short run.
• D) None of the events listed above.

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Definitions:

Total Assets

The sum of all resources owned by a company, including cash, investments, property, and other assets, reflected on the balance sheet.

Cash Ratio

A liquidity ratio that measures a company's ability to pay off short-term liabilities with cash and cash equivalents alone, without selling or liquidating other assets.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.