If the Long-Run Supply Curve of a Purely Competitive Industry

question 70

Multiple Choice

If the long-run supply curve of a purely competitive industry slopes upward, this implies that the prices of relevant resources

• A)will fall as the industry expands.
• B)are constant as the industry expands.
• C)rise as the industry contracts.
• D)rise as the industry expands.

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Definitions:

Corporate Investors

Organizations that invest in other companies’ securities, often for strategic purposes beyond mere financial gain.

Low-Dividend Policy

A low-dividend policy is a corporate strategy where a company decides to retain a larger portion of earnings for reinvestment rather than distributing it to shareholders as dividends.

New Equity Sales

The process of selling new shares of a company to investors to raise capital.

Residual Policy

A financial strategy where dividends are paid to shareholders from the remaining or residual net income after all operating and expansion expenses.