When Existing Firms in a Competitive Market Are Profitable, an Incentive

question 438

Multiple Choice

When existing firms in a competitive market are profitable, an incentive exists for

• A)new firms to seek government subsidies that would allow them to enter the market.
• B)new firms to enter the market, even without government subsidies.
• C)existing firms to raise prices.
• D)existing firms to increase production.

Recognize different types of control groups used in experimental designs.

Analyze factors that affect the internal validity of a study.

Differentiate between various experimental study designs and their purposes.

Explain the importance and challenges of ensuring internal and external validity in research studies.

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Definitions:

Working Capital

It is the difference between a company's current assets and current liabilities, indicating the liquidity available to fund operations.

Distributorship

A business arrangement in which one company grants another company or individual the right to sell its goods or products within a specified territory or market.

Annual Net Cash

The total amount of cash that a business generates and uses over a one-year period, after all expenditures are accounted for.

After-Tax Discount Rate

The rate used to discount future cash flows after taxes in investment analysis to find their present value.