Which of the Following Statements Is True of a Perfectly

question 261

Multiple Choice

Which of the following statements is true of a perfectly competitive market?

• A) Innovation is less likely in a competitive market because of the free entry and exit of firms.
• B) Innovation is likely in a competitive market because of the free entry and exit of firms.
• C) The firms in a competitive market invest more in research and development because they face an inelastic demand curve.
• D) The firms in a competitive market invest more in research and development because their demand for resources is perfectly elastic.

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Definitions:

Rate of Return

The increase or decrease in the value of an investment over a set time frame, shown as a percent of the investment's original price.

Assets

Economic resources owned or controlled by an individual, corporation, or country that are expected to provide future benefits, including cash, real estate, and intellectual property.

Equity Capital

Equity Capital is the amount of money that is invested in a company by its owners, in exchange for ownership interest in the company.

Rental Cost

The amount of money that must be paid regularly to lease a property or equipment.