"In a Long-Run Equilibrium, Price Is Equal to Average Total

question 168

Multiple Choice

"In a long-run equilibrium, price is equal to average total cost." This statement applies to

• A)competitive markets, but not to monopolistically competitive markets or monopolies.
• B)competitive and monopolistically competitive markets, but not to monopolies.
• C)competitive markets, monopolistically competitive markets, and monopolies.
• D)None of the above is correct.

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Definitions:

Payback Method

A simplistic financial analysis technique that calculates the time required for an investment to generate cash flows sufficient to recover its initial cost.

Replacement Chain Method

A capital budgeting decision tool that compares different projects by analyzing them over a common time period, particularly useful for comparing investments of different durations.

Equivalent Annual Annuity

A financial term that represents the annual cash flow from an investment over its lifespan, making it easier to compare different investments.

Capital Rationing

Capital rationing is a strategy where companies limit or restrict their capital investments due to budgetary constraints.