The Equilibrium Price of a Good or Service in a Competitive

question 28

Multiple Choice

The equilibrium price of a good or service in a competitive market is

• A)Higher than it should be because profits are included in the price.
• B)A reflection of the opportunity cost of producing the product.
• C)Lower than it should be because bankruptcies are common in competitive markets.
• D)Higher than the opportunity cost of producing the product.

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Definitions:

Operating Expenses

Regular costs for operating a business, including rent, utilities, payroll, and materials, but excluding costs associated with the production of goods sold.

Corporate Tax Rate

The percentage of a corporation's taxable income that it must pay to the government as tax.

Earnings Per Share

A financial ratio that measures the amount of net income earned per share of stock outstanding.

Cash Dividends

Cash payouts by a company to its stock owners, regularly as a sharing of profits.