We Know That a Perfectly Competitive Firm Is a Price

question 170

Multiple Choice

We know that a perfectly competitive firm is a price taker because

• A) its MC curve slopes upward.
• B) its ATC curve is U-shaped.
• C) its demand curve is horizontal.
• D) MC and ATC are equal at the profit-maximizing amount of output.
• E) it has no supply curve.

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the loss in value as it ages, used for accounting and tax purposes.

Cash Coverage Ratio

A financial metric that measures a company's ability to pay off its debt obligations with its operating cash flow. It is an important indicator of financial health.

Debt-Equity Ratio

A marker indicating the relative financing tactics of using debt and equity in company assets.

Return On Assets

A financial ratio indicating the profitability of a firm relative to its total assets, demonstrating how efficient a company is at using its assets to generate earnings.