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What Happens in a Decreasing-Cost Industry When Some Firms Leave

question 55

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What happens in a decreasing-cost industry when some firms leave and the industry's output contracts?


Definitions:

Operating Activities

Activities that relate to the primary operations of a company, such as sales and production, and their effects on cash flow.

Fixed Asset Turnover Rate

A ratio that measures how efficiently a company uses its fixed assets to generate sales.

Total Asset Turnover Rate

A financial ratio that measures the efficiency of a company's use of its assets to generate sales, calculated as sales divided by total assets.

Net Fixed Assets

The value of a company's fixed assets minus depreciation, representing the actual usable value of physical assets.

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