A Competitive Market Is in Long-Run Equilibrium

question 251

Multiple Choice

A competitive market is in long-run equilibrium. If demand increases, we can be certain that price will

• A)rise in the short run. Some firms will enter the industry. Price will then rise to reach the new long-run equilibrium.
• B)rise in the short run. Some firms will enter the industry. Price will then fall to reach the new long-run equilibrium.
• C)fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.
• D)not rise in the short run because firms will enter to maintain the price.

Acquire knowledge on the complexities and accounting requirements of speculative derivatives.

Differentiate between foreign currency forward contracts and option contracts, including their respective accounting treatments.

Understand how to calculate the impact of exchange rate changes on the financial statements of companies engaged in foreign transactions.

Identify the components of, and prepare, journal entries related to foreign currency transactions and adjusting entries at year end.