If a Firm in a Perfectly Competitive Market Faces an Equilibrium

question 43

Multiple Choice

If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue

• A) will be greater than $5.
• B) will be less than $5.
• C) maybe either greater or less than $5.
• D) will also be $5.
• E) will be any amount but $5.

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Definitions:

Stated Interest Rate

The interest rate specified on a loan or investment agreement, not accounting for compounding or fees.

Prevailing Rate

The current interest rate or wage rate for a particular industry or geographic location.

Present Value

The value today of a sum of money or cash flows expected in the future, discounted at a certain rate of return.

Maturity Value

The amount that will be paid out or received, including principal and interest, upon the expiration or maturity of a financial instrument.