When Considering Perfect Competition the Absence of Entry Barriers Implies

question 369

Multiple Choice

When considering perfect competition the absence of entry barriers implies that

• A) no firm can enter the industry.
• B) firms can enter but cannot get out of the industry easily.
• C) all firms will earn economic profit.
• D) firms can enter and leave the industry without serious impediments.

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Definitions:

Consolidated Balance Sheet

A financial statement that combines the assets, liabilities, and equity of a parent company and its subsidiaries into one document.

Deferred Income Taxes

A liability on the balance sheet that results from differences in the timing of recognition of income and expenses for tax and financial reporting purposes.

Straight Line Amortization

A method of allocating the cost of an intangible asset over its useful life in equal annual installments.

Effective Tax Rate

The actual rate at which an individual or a corporation is taxed, calculated by dividing the total tax paid by the taxable income.