Three Firms Are Currently Producing and Selling in a Market

question 28

Multiple Choice

Three firms are currently producing and selling in a market.When one of the three firms exits the market,economists expect that the equilibrium price will ________ and the equilibrium quantity will ________.

• A) be lower; be lower
• B) be higher; be lower
• C) be lower; be higher
• D) be higher; be higher
• E) not change; not change

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Definitions:

Average Operating Assets

The average value of the assets used in the production or operation of a company over a certain period.

Net Operating Income

The total earnings from a company's operations, after subtracting operating expenses but before interest and taxes.

Performance Evaluation

The process of assessing and reviewing an employee's or organization's work performance and outcomes against established standards or objectives.

Labor Efficiency Variance

The difference between the actual labor-hours taken to complete a task and the standard hours allowed for the actual output, multiplied by the standard hourly labor rate.