In Short Run Equilibrium in a Perfectly Competitive Industry Whose

question 189

Multiple Choice

In short run equilibrium in a perfectly competitive industry whose firms are earning economic profits,a firm:

• A) has no incentive to change its output.
• B) has no incentive to change its plant size.
• C) has no incentive to expand its factory.
• D) has no incentive to leave the industry.

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership equity spread among individual shareholders.

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term liquidity.

Paid-In Capital

The amount of money a company has received from shareholders in exchange for shares of stock.