The Fact That a Perfectly Competitive Firm Has a Perfectly

question 52

Multiple Choice

The fact that a perfectly competitive firm has a perfectly elastic demand curve means

• A)there is no limit to the firm's profits.
• B)there is no limit to the firm's revenues.
• C)that it can sell all it wants at any price.
• D)None of the above

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Definitions:

Current Liability

A current liability is a company's short-term financial obligation that is due within one year or within the normal operating cycle.

Current Asset

Assets expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of a business, whichever is longer.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used, as opposed to the indirect method which adjusts net income for accruals.

Accrued Interest

Interest that has been incurred but not yet paid or received at the end of the accounting period.