A Perfectly Competitive Firm Would Be Willing to Remain in the Industry

question 107

Multiple Choice

A perfectly competitive firm would be willing to remain in the industry in the long run at zero economic profit because

• A)its total revenues would be positive.
• B)accounting profit would be negative.
• C)revenue is equal to all costs, including the opportunity cost of capital and labor.
• D)its fixed costs would prevent it from leaving the industry.

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Definitions:

Passive Benchmark

A standard, typically an index, against which the performance of an investment portfolio can be gauged, emphasizing a passive investment strategy.

Foreign Exchange Risk

The potential for financial loss due to fluctuations in exchange rates affecting foreign-denominated investments or transactions.

Translation Exposure

The risk that a company's financial statements can be affected by changes in exchange rates when foreign operations are consolidated.

Hedging Risk

The process of making an investment or entering into a financial transaction in order to reduce the risk of adverse price movements in an asset.