When Competitive Forces in an Industry Are Weak

question 161

Multiple Choice

When competitive forces in an industry are weak,

• A) the absence of competition generally leads to overproduction.
• B) prices may exceed the amount consumers are willing to pay.
• C) the operational efficiency of private firms will be enhanced.
• D) higher prices and less than optimal production may result.

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Definitions:

Semiannual Interest

Interest that is paid or calculated twice a year, often used in bond payments.

Compounded Annually

This term describes interest on an investment that is calculated once a year, where the interest added also earns interest in subsequent years.

Withdrawals

Money taken out from a business by its owners for personal use.

Compound Interest

Interest calculated on the initial principal as well as the accumulated interest of previous periods of a deposit or loan.