In the Long Run, Assuming That the Owner of a Firm

question 466

Multiple Choice

In the long run, assuming that the owner of a firm in a competitive industry has positive opportunity costs, she

• A)should exit the industry unless her economic profits are positive.
• B)will earn zero accounting profits but positive economic profits.
• C)will earn zero economic profits but positive accounting profits.
• D)should ignore opportunity costs because they are a type of sunk cost that disappears in the long run.

Understand various global market entry strategies.

Identify and analyze the advantages and disadvantages of direct investment.

Distinguish between licensing, franchising, and joint ventures.

Recognize strategies for matching products and promotional efforts to global markets.

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Definitions:

Creditors

Individuals or institutions that lend money or extend credit to others, with the expectation of being paid back with interest.

Price-Earnings Ratio

The ratio for valuing a company that measures its current share price relative to its per-share earnings, widely used by investors to assess the market's valuation of a stock relative to its earnings performance.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business for a specified period.

Book Values

The value of an asset as recorded on the company’s balance sheet, calculated as the cost of the asset minus any depreciation, amortization, or impairment costs.