Figure 14-5 Suppose a Firm Operating in a Competitive Market Has the Has

question 333

Multiple Choice

Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-5. In the short run, if the market price is higher than P1 but less than P4, individual firms in a competitive industry will earn

• A)positive profits.
• B)zero profits.
• C)losses but will remain in business.
• D)losses and will shut down.

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Definitions:

Rental Income

Earnings received from renting out property or other assets.

Journal Entry

A record of financial transactions in accounting, typically consisting of a debit to one or more accounts and a credit to another, balancing out.

Liabilities

Financial obligations or debts that a company owes to others, which are expected to be paid in the future.

Journal Entry

A record of financial transactions in the double-entry bookkeeping system, indicating credits and debits in accounts.