Which of the Following Best Explains Why a Firm in a Competitive

question 194

Multiple Choice

Which of the following best explains why a firm in a competitive price-taker market must take the price determined in the market?

• A) The short-run average total costs of firms that are price takers will be constant.
• B) If a price taker increased its price, consumers would buy from other suppliers.
• C) Firms in a price-taker market will have to advertise in order to increase sales.
• D) There are no good substitutes for the product supplied by a firm that is a price taker.

Analyze the relationship between cost reduction and improvement in ROE.

Evaluate the effect of inventory management on a firm's financial health and ROE.

Calculate and interpret various financial ratios, including EBITDA coverage, quick ratio, and times interest earned (TIE).

Understand the importance of financial metrics such as days sales outstanding (DSO), debt amount, and ROA in assessing a firm's performance.

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Definitions:

Uncontrollable

Describing events or processes that cannot be managed, directed, or restrained.

Human-Made

Refers to objects, environments, or processes that are created or significantly altered by humans, as opposed to occurring naturally in the environment.

Familiar

Well known from long or close association, giving a sense of comfort or recognition.

Systematic Desensitization

A therapeutic technique used to treat phobias and anxiety disorders by gradually exposing the patient to the feared object or situation in a controlled manner.