If There Are Large Fixed Costs,due to Research and Development,perfect

question 19

Multiple Choice

If there are large fixed costs,due to research and development,perfect competition does not generate new ideas,because:

• A)firms need to recoup these costs through higher profits.
• B)with monopolistic competition,prices are equal to the marginal cost plus a markup.
• C)with monopolistic competition,prices are equal to the marginal cost minus a markup.
• D)perfectly competitive firms always set prices lower than the marginal cost.
• E)Both a and b are correct.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to fund daily operations and short-term financial obligations.

Current Liabilities

Financial obligations a company is expected to settle within one year or within its operating cycle, whichever is longer.

Current Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with short-term assets.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales revenue, calculated by dividing sales revenue by total assets.