When Firms in a Price-Taker Market Are Temporarily Able to Charge

question 112

Multiple Choice

When firms in a price-taker market are temporarily able to charge prices that exceed their production costs,

• A) the firms will earn long-run economic profit.
• B) additional firms will be attracted into the market until price falls to the level of per-unit production cost.
• C) the firms will earn short-run economic profits that will be offset by long-run economic losses.
• D) the existing firms must be colluding or rigging the market, otherwise, they would be unable to charge such high prices.

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Definitions:

Current Assets

Current Assets are all assets of a company that are expected to be sold, used, or consumed within one year in the normal course of business.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used for managing liquidity and ensuring a company can meet its short-term obligations.

Budgeted Monthly Sales

An estimation of the sales revenue that a business expects to achieve in a particular month.

Other Payments

Refers to miscellaneous or additional payments that are outside the regular or expected transactions.