In the Long Run, a Firm in a Perfectly Competitive

question 251

Multiple Choice

In the long run, a firm in a perfectly competitive industry will supply output only if its total revenue covers its

• A) explicit plus its implicit costs.
• B) fixed costs.
• C) implicit costs.
• D) explicit costs.

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Definitions:

Default Risk

The risk that a borrower will not make the contractual interest or principal payments on their debt obligations.

Corporate Bond

A debt security issued by a corporation to raise funding, promising to repay the principal along with interest at specified dates.

TIPS Bond

Treasury Inflation-Protected Securities, a type of U.S. government bond designed to help investors protect against inflation by adjusting the principal value based on changes in the consumer price index.

Coupon Rate

The percentage of a bond's face value that is annually paid as interest by the bond.