If Price Remains Above the Average Total Cost for Firms

question 30

Multiple Choice

If price remains above the average total cost for firms in a competitive industry:

• A)existing firms will exit that industry.
• B)new firms will enter that industry.
• C)the number of firms in the industry will neither increase nor decrease.
• D)the existing firms will be making zero economic profit.

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Definitions:

Present Value

The immediate value of a prospective amount of money or cash flow series, determined by a specific rate of return.

Future Amount

The predicted total value of an asset or investment at a specific future date, considering factors like interest rates or earnings.

Discounted Value

The present value of a future payment or series of payments, discounted back to the present time using a specific discount rate.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, reflecting time value of money.