In Pure Competition, If the Market Price of the Product

question 188

Multiple Choice

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

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

Cash Flow from Assets

This is the total amount of money being transferred in and out of a company's assets, including operations, investments, and financing activities.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life, reflecting the assets diminishing value over time due to use, wear and tear, or obsolescence.

Cash Flows

Cash flows denote the movement of money into and out of an enterprise, playing a crucial role in assessing its operational efficiency and financial stability.

Statement of Comprehensive Income

A financial report detailing all variations in equity over a period, excluding those changes caused by investments from and distributions to shareholders.