If Firms in a Perfectly Competitive Market Are Incurring an Economic

question 103

Multiple Choice

If firms in a perfectly competitive market are incurring an economic loss,some firms will exit.This exit shifts the market

• A)demand curve leftward,and the market price falls.
• B)demand curve rightward,and the market price rises.
• C)supply curve leftward,and the market price rises.
• D)supply curve rightward,and the market price falls.
• E)supply curve leftward and the market demand curve rightward.

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Definitions:

Common Stock

Common stock represents ownership shares in a corporation, providing voting rights and entitling the shareholder to a portion of the company’s profits in the form of dividends.

Dividends in Arrears

Dividends on cumulative preferred stock that have not been paid in prior years.

Cumulative

Describes items or amounts that increase over time through successive additions, often used in the context of dividends that are accrued if not paid in a given period.

Preferred Stockholders

Investors who own preferred shares in a company, which have a higher claim on assets and earnings than common stock, often receiving dividends before common stockholders.