In the Short Run, a Perfectly Competitive Firm's Economic Profits

question 483

Multiple Choice

In the short run, a perfectly competitive firm's economic profits

• A) must equal zero, that is, the firm earns a normal profit.
• B) must be positive.
• C) might be positive, negative (an economic loss), or zero (a normal profit).
• D) must be negative, that is the firm must incur an economic loss.

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Definitions:

Collateral

Assets pledged by a borrower to secure a loan or credit, which the lender may seize if the borrower fails to repay the agreed amounts.

Acquisition

The process of obtaining control of another company or business entity through purchase or merger.

Poison Pills

Strategies employed by companies to deter hostile takeovers, making the company less attractive to potential acquirers.

Takeover Attempt

An effort by one company to acquire control over another company, often by purchasing a significant portion of its stock.