Figure 14-12

question 179

Multiple Choice

Figure 14-12
-Refer to Figure 14-12. If the figure in panel a) reflects the long-run equilibrium of a profit-maximizing firm in a competitive market, the figure in panel b) most likely reflects

• A) perfectly inelastic long-run market supply.
• B) perfectly elastic long-run market supply.
• C) the entry of firms into the industry when some resources used in production are available only in limited quantities.
• D) the fact that zero profits cannot be sustained in the long run.

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Definitions:

Semi-Annual Interest

Interest on a loan or investment calculated twice a year.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Semi-Annual Coupon

A bond or fixed-income security that pays interest to its holder twice a year.

Yield To Maturity

The total return expected on a bond if held until the end of its lifetime.