Suppose a Perfectly Competitive Market Is in a Short-Run Equilibrium

question 227

Multiple Choice

Suppose a perfectly competitive market is in a short-run equilibrium.If some firms exit the market,the profit of the remaining firms ________; if some firms enter the market,the profit of each existing firm ________.

• A) decreases; is unchanged
• B) increases; decreases
• C) increases; is unchanged
• D) is unchanged; is unchanged
• E) decreases; increases

---

Definitions:

Total Debt Ratio

A financial ratio that measures the proportion of a company's assets financed by its total debt.

Net Working Capital

A measure of a company's efficiency and its short-term financial health, calculated by subtracting current liabilities from current assets.

Total Assets Ratio

A financial metric comparing total assets to another key financial figure, often used to assess a company's size, efficiency, or leverage.

Accounts Payable

Money owed by a business to its suppliers or creditors for goods and services purchased on credit, typically due within a short-term period.