As Exit from a Perfectly Competitive Industry That Is Currently

question 180

Multiple Choice

As exit from a perfectly competitive industry that is currently unprofitable pushes up the market price, producers will move from a situation where price ____ average total cost to one where price ____ average total cost.

• A)exceeds; equals.
• B)is less than; equals.
• C)equals; is less than.
• D)equals; exceeds.
• E)exceeds; is less than.

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Definitions:

Return On Assets Ratio

The Return on Assets (ROA) ratio measures a company's ability to generate profit from its assets, indicating efficiency in using assets to produce earnings.

Profit Margin

A financial performance metric that measures the amount of net income earned with each dollar of sales generated by comparing net income to revenue.

Asset Turnover Ratios

Financial metrics that measure the efficiency of a company in using its assets to generate sales or revenue.

Inventory Turnover Ratio

The inventory turnover ratio is a measure of how often a company sells and replaces its stock of goods within a certain period, indicating the efficiency of inventory management.