In the Long Run, Firms Will Exit a Perfectly Competitive

question 4

Multiple Choice

In the long run, firms will exit a perfectly competitive industry if:

• A) excess profits exceed zero.
• B) excess profits are less than zero.
• C) total profit equals zero.
• D) excess profits equal zero.

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Definitions:

Current Assets

Assets likely to be converted into cash, sold, or consumed within one year or the business cycle, whichever is longer.

Statement Of Financial Position

A financial document that shows the assets, liabilities, and equity of a company at a particular point in time, also known as a balance sheet.

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants.

Equity Securities

Financial instruments indicating ownership in a company, such as stocks, which may offer dividends and voting rights.