A Good First Step in a Bankruptcy Prediction Is to Know

question 35

True/False

A good first step in a bankruptcy prediction is to know how many companies go bankrupt each year (as a percentage of total firms) to understand how prevalent bankruptcy is as a whole.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good suppliers are willing to offer for sale, holding all else equal.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit from the market.

Pure Monopoly

A market structure characterized by a single seller controlling the entire market supply of a unique product, with no close substitutes.

Economic Profits

Profits exceeding the opportunity costs of all resources used by the firm, indicating an above-normal return.