In the Long-Run, If Firms in a Perfectly Competitive Market

question 331

Multiple Choice

In the long-run, if firms in a perfectly competitive market are incurring persistent economic losses, some firms will

• A) exit and the price will fall.
• B) exit and the price will rise.
• C) enter and the price might either rise or fall.
• D) exit and the price might either rise or fall.

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Definitions:

Inflation

The velocity of rise in the aggregate pricing of goods and services, reducing the power of the dollar.

Dividends

Regular payments declared by a company's board of directors and given to its shareholders from the company's earnings.

Standard Deviation

A statistical measure of the dispersion or variability in a dataset, signifying the degree to which individual observations differ from the mean value.