The Motivating Force Behind an Increase in Supply in a Long-Run

question 25

Multiple Choice

The motivating force behind an increase in supply in a long-run adjustment to equilibrium is

• A) lower prices.
• B) economic profits that are present in the short run.
• C) higher profit expectations among owners of firms in the industry, triggered by increased prices.
• D) normal profits witnessed by individuals outside the industry that trigger entry.
• E) the decreases in average cost that can be obtained through economies of scale.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances in temporary accounts to permanent accounts, preparing the books for the next accounting period.

Adjusting Entries

Entries in the books of accounts made during the final part of an accounting cycle to distribute profits and costs to their rightful period.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.

Adjusting Entries

Records entered into accounting logs at the close of an accounting period to assign earnings and expenses to the period they truly happened.