If There Are Above-Normal Short Run Profits in an Industry

question 124

Multiple Choice

If there are above-normal short run profits in an industry, there will be:

• A) entry.
• B) exit.
• C) no entry or exit.
• D) below-normal profits in the next period.

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Definitions:

Operating Activities

The primary revenue-producing activities of an entity and other activities that are not investing or financing activities.

Capital Expenditures

Large spending by a company on physical assets like property, plant, and equipment, intended to be used for more than one year.

Financing Activities

Transactions and events whereby resources are obtained from, or repaid to, owners (equity financing) and creditors (debt financing).

Long-Term Debt

Borrowings and financial obligations payable over a period longer than one year.