The Following Graphs Depict a Perfectly Competitive Firm and Its

question 57

Multiple Choice

The following graphs depict a perfectly competitive firm and its market.
Assume that all firms in this industry have identical cost functions.
Assume that the market is currently as shown in the graph on the left .What is true of the number of firms?

• A) There are currently 30 firms in the industry,and that number will remain stable until there is a change in demand or in technology.
• B) There are currently ten firms in this industry,and that number will remain stable until there is a change in demand or in technology.
• C) It is impossible to tell how many firms currently exist in this industry,but you can tell that the number of firms is likely to increase in the near future.
• D) There are currently ten firms in this industry,and that number is likely to increase in the near future.

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Definitions:

Non-Interest-Bearing Note

A type of promissory note that does not accrue interest over its life, with the borrower repaying only the principal amount borrowed.

Net Carrying Value

The current book value of an asset or company after subtracting total liabilities from total assets.

Bonus Compensation Plan

A reward system for employees based on performance, often seen as a way to incentivize exceeding targets or goals.