In a Perfectly Competitive Industry, the Demand for a Single

question 152

Multiple Choice

In a perfectly competitive industry, the demand for a single firm's product is perfectly elastic

• A) because this firm's output is a perfect substitute for any other firm's output.
• B) because this firm is a price maker.
• C) only in the long run.
• D) because there are many buyers in this market.

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Definitions:

Acid-Test Ratio

A financial metric used to determine a company's short-term liquidity position, measuring its ability to cover short-term liabilities with its most liquid assets.

Prepaid Expenses

Expenses paid in advance for goods or services to be received in the future, often recorded as assets on the balance sheet.

Current Liabilities

Short-term financial obligations that are due to be paid within one year or within the normal operating cycle of a business.

Acid-Test Ratio

A liquidity ratio, also known as the quick ratio, that measures a company's ability to pay off its current liabilities with its quick assets (cash, marketable securities, and accounts receivable).