When Firms in a Competitive Market Have Different Costs, It

question 144

Multiple Choice

When firms in a competitive market have different costs, it is likely that:

• A)the market will no longer be considered competitive
• B)free entry and exit in the market is likely to be violated
• C)some firms will earn economic profits in the long run
• D)long-run market supply will be downward-sloping

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Definitions:

Dividend

Dividend represents the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Share

A unit of ownership in a company or financial asset, often traded on a stock exchange.

Arithmetic Average Return

The simple average of a series of returns over a period of time, calculated by summing the returns and dividing by the number of periods.

Jensen's Measure

A performance evaluation measure that calculates the excess return a fund generates over its expected return, given its level of risk.