If Economic Profits in a Particular Industry Increase, Then We

question 86

Multiple Choice

If economic profits in a particular industry increase, then we would expect

• A)resources to be diverted away from that industry.
• B)firms in that industry to produce less output.
• C)firms to enter that industry, thus expanding it.
• D)consumers to buy less from that industry.

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Definitions:

Accrual-based Net Income

A measure of an entity's financial performance that includes both cash and non-cash transactions during a reporting period.

Domestic Corporations

Companies that are incorporated and operate within the legal framework of a specific country.

Subsidiaries

Companies that are partially or fully owned by another company, which usually holds a controlling interest in the subsidiary's shares.

Accrual-based Net Income

Net income calculated under the accrual basis of accounting, recognizing revenues when earned and expenses when incurred, regardless of cash flow.