In Pure Competition, If the Market Price of the Product

question 116

Multiple Choice

In pure competition, if the market price of the product is lower than the minimum average total cost of the firms, then

• A)some firms will enter the industry and the industry supply will increase.
• B)other firms will exit the industry and the industry supply will decrease.
• C)some firms will exit the industry and the industry supply will increase.
• D)other firms will enter the industry and the industry supply will decrease.

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Definitions:

Compounded Semi-Annually

Interest added to the principal of a deposit or loan every six months, affecting total interest earned or paid.

Periodic Interest Rate

The interest rate applied to a loan or savings account over a specific period of time, often monthly or annually.

Payment Interval

Payment interval is the frequency at which recurring payments are made, such as monthly, quarterly, or annually for loans, rents, or subscriptions.

Compounded Annually

This refers to the process by which the interest earned on an investment or savings is calculated once a year, adding to the principal for the next year's interest calculation.