In Reference to the Long-Run Firm Competitive Equilibrium Diagram,which of the Following

question 147

Multiple Choice

In reference to the long-run firm competitive equilibrium diagram,which of the following statements is INCORRECT?

• A)In the long run,the firm has no incentive to alter its scale of operations.
• B)Because profits must be zero in the long run,the firm's short-run average costs (SA
• C)must equal P at \(\mathrm { Q } _ { \mathrm { e } }\) ,which occurs at minimum SAC.
• C)In the long run,the firm operates where price,marginal revenue,marginal cost,short-run minimum average cost,and long-run minimum average cost all are equal.
• D)In the long run,this firm must be part of a constant-cost industry,because its marginal revenue curve is perfectly elastic.

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Definitions:

Acid-Test Ratio

A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.

Marketable Securities

Financial instruments that are easily convertible into cash, such as stocks and bonds.

Inventory Turnover Ratio

A measure of how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Quantity Discounts

Price reductions given to customers purchasing large volumes.