In a Purely Competitive Industry

question 237

Multiple Choice

In a purely competitive industry,

• A)there will be no economic profits in either the short run or the long run.
• B)economic profits may persist in the long run if consumer demand is strong and stable.
• C)there may be economic profits in the short run but not in the long run.
• D)there may be economic profits in the long run but not in the short run.

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Definitions:

Red Herring

A preliminary prospectus distributed to prospective investors in a new issue of securities.

Preliminary Prospectus

An initial document provided by a securities issuer that details the investment offering for potential investors but is not yet approved by the relevant authority.

Seasoned Equity Offering (SEO)

A sale of equity shares by a company that has already gone public through an additional public offering.

Green Shoe Option

A clause contained within the underwriting agreement of an IPO that allows underwriters to purchase up to an additional 15% of shares at the offering price.