If the Long-Run Industry Supply Curve in a Perfectly Competitive

question 17

Multiple Choice

If the long-run industry supply curve in a perfectly competitive market is horizontal, then very likely input prices will ____ as industry output expands.

• A)increase
• B)decrease
• C)remain constant
• D)first increase and then decrease
• E)None of the above.

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Definitions:

Voting Common Stock

Equity securities that give shareholders the right to vote on corporate matters.

Fair Value

The compensation for parting with an asset or the financial burden of settling a liability in an orderly market operation as of the measurement checkpoint.

Acquisition Method

An accounting technique used to consolidate the financial statements of two companies when one acquires the other.

Subsidiary's Fair Value

The estimated market value of a subsidiary company if its assets were to be sold or the company were to be acquired as a whole.