If Demand Increases in a Perfectly Competitive Market, Firms Will

question 138

Multiple Choice

If demand increases in a perfectly competitive market, firms will likely:

• A)experience a loss due to increased competition.
• B)permanently set prices artificially higher.
• C)enter the market in hopes of capturing some profits.
• D)engage in more advertising in order to further stimulate the increase in demand.

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Definitions:

Present Discounted Value

The current value of a future amount of money or stream of cash flows, adjusted for the time value of money.

Human Capital

The economic value of an individual's skills, knowledge, and experiences.

Future Earnings

Projected profits or income of a company or individual, often used in investment analysis to evaluate potential growth.

Nonmonetary Considerations

Factors influencing decisions that are not based on money or financial gain, such as ethics or environmental impact.