Which of the Following Statements Best Describes the Behavior Over

question 36

Multiple Choice

Which of the following statements best describes the behavior over time of the components of equal mortgage payments?

• A)The proportion of interest expense to payment of principal remains the same.
• B)Payment of principal increases and interest expense decreases.
• C)Both payment of principal and interest expense decrease.
• D)Interest expense increases and payment of principal decreases.

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Definitions:

Long-Run Equilibrium

The state in which all factors of production and costs are variable, and firms earn normal profits in a competitive market.

Competitive Firm

A firm operating in a market with many competitors, where prices are determined by supply and demand forces.

Economic Profits

The difference between total revenue and total economic costs (including both explicit and implicit costs), representing surplus or profit not achievable in perfect competition.

Competitive Industries

Industries characterized by many firms competing for market share, leading to innovation and efficient resource allocation.