In a Competitive Industry Where the Typical Firm Is Making

question 22

Multiple Choice

In a competitive industry where the typical firm is making economic profit,

• A)entry occurs as long as economic profit can be made.
• B)entry occurs until supply equals demand.
• C)entry occurs until price equals minimum average variable cost.
• D)entry occurs until price equals marginal cost.
• E)exit occurs as firms are sold to the highest bidders.

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Definitions:

Break-Even Sales

The level of sales at which total revenues equal total costs, resulting in neither profit nor loss for the business.

Common Fixed Expenses

Common fixed expenses are costs that do not fluctuate with the volume of production or sales, shared by different segments or products of a business, like rent and insurance.

Operating Period

The span of time during which a company or a project is expected to operate or carry out its activities.

Break-Even Sales

The amount of revenue required to cover all fixed and variable costs, resulting in a net income of zero.