When Managers of Firms in a Competitive Market Observe Falling

question 17

Multiple Choice

When managers of firms in a competitive market observe falling profits,what are they likely to infer

• A)The market is characterized by a violation of conventional market forces.
• B)The market is characterized by over-investment.
• C)The market is characterized by rising prices.
• D)The market is characterized by the entering of new firms.

---

Definitions:

Elastic

Describes a situation in which the quantity demanded or supplied of a good is highly responsive to changes in price.

Growth Rate

The percentage increase of a specific variable within a specified time frame, commonly used to measure economic growth, population increase, or company expansion.

Durable Equipment

Equipment that is designed for a long useful life, typically used in business, industrial, or medical settings.

Vertical Axis

In graph theory and visuals, the vertical axis is typically the y-axis, representing dependent variables or metrics that can be measured against the independent variables on the horizontal axis.