When Firms Are Neither Entering nor Exiting a Perfectly Competitive

question 429

Multiple Choice

When firms are neither entering nor exiting a perfectly competitive market,

• A)total revenue must equal total variable cost for each firm.
• B)economic profits must be zero.
• C)price must equal average variable cost for each firm.
• D)Both a and c are correct.

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Definitions:

Average Collection Period

The average amount of time it takes for a company to receive payments owed by its customers.

Net Accounts Receivable

The total amount of money owed by customers for purchases made on credit, minus any provision for doubtful accounts.

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a refund or credit.

Bad Debt Expense

An expense recorded to account for receivables that are not expected to be collected, reflecting credit losses in the financial statements.