When a Perfectly Competitive Firm or a Monopolistically Competitive Firm

question 43

Multiple Choice

When a perfectly competitive firm or a monopolistically competitive firm is making zero economic profit

• A) the industry is in equilibrium; no firms will want to enter or exit.
• B) those firms who don't differentiate their product sufficiently will want to leave the market.
• C) those firms who wish to differentiate their product more will want to enter the market.
• D) market demand shifts to the right.
• E) the price of the output will rise in the long run.

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Definitions:

Cash Over And Short

An account that records discrepancies between the actual amount of cash received and the expected amount based on sales records.

Miscellaneous Expense

Expenses that do not neatly fit into specific categories, often minor in nature and not regularly recurring.

Contra Asset

An account on a company's balance sheet that offsets against an asset account on the same balance sheet.

Miscellaneous Revenue

Income from sources other than the main business activities, such as rental income or interest income.