(Figure: Perfectly Competitive Firms I) the Graph Represents Three Perfectly

question 120

Multiple Choice

(Figure: Perfectly Competitive Firms I) The graph represents three perfectly competitive firms. Which of the following statements is (are) TRUE? I. In the long run, each firm will produce the same quantity of output.
II) Firm 1 is the highest-cost producer and Firm 3 is the lowest-cost producer.
III) Firm 3 will produce the most output in the long run.

• A) II
• B) III
• C) II and III
• D) I

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity of the business.

Acid-Test Ratio

The acid-test ratio, also known as the quick ratio, measures a company's ability to pay its short-term liabilities with its most liquid assets.

Quick Ratio

A liquidity measure indicating a company's ability to cover its current liabilities with its most liquid assets, excluding inventory.

Book Value Per Share

A financial metric showing the portion of a company's net asset value attributable to each share of stock.