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lana [24]
3 years ago
13

One difference between the short run and the long run is that perfectly competitive​ firms: A. always earn more economic profit

in the long run. B. always earn positive economic profit in the short​ run, but never in the long run. C. can earn​ positive, negative, or zero economic profit in the short​ run, but will earn zero economic profit in the long run. D. earn zero economic profit in the short​ run, but will earn positive economic profit in the long run.
Business
1 answer:
AveGali [126]3 years ago
5 0

Answer: The correct answer is "C. can earn​ positive, negative, or zero economic profit in the short​ run, but will earn zero economic profit in the long run".

Explanation:  

In perfect competition we have a dynamic economy with technology and changing consumer tastes, we will always have some competitive industries with economic benefit and others with economic losses, as adjustments are made.

The economic benefits are forced to zero because companies enter without barriers to entry into the industry.

Losses are eliminated due to companies that leave the industry to obtain at least a normal profit elsewhere and  Resources are reallocated, from industries that have losses, to industries that have economic benefits.

Therefore, in the short term it is possible for companies to obtain extraordinary benefits, while in the long term the entry and exit of companies eliminates these exceptional benefits.

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vlabodo [156]

Answer:

B

Explanation:

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4 0
3 years ago
Johnny Cake Ltd. has 30 million shares of stock outstanding selling at $40 per share and an issue of $40 million in 8 percent, a
erma4kov [3.2K]

Answer:

WACC = 0.16637 OR 16.637%

Explanation:

WACC or weighted average cost of capital is the cost of a firm's capital structure which can comprise of debt, preferred stock and common equity. The WACC for a firm with only debt and common equity can be calculated as follows,

WACC = wD * rD * (1-tax rate)  +  wE * rE

Where,

  • w represents the weight of each component based on market value in the capital structure
  • r represents the cost of each component
  • D and E represents debt and equity respectively

To calculate WACC, we first need to calculate the Market value an cost of equity.

The market value of equity = 30 million shares * $40 per share

MV of equity = $1200 million

The cost of equity can be found using the formula for Price today (P0) under constant growth model of DDM.

P0 = D1 / (r - g)

40 = 4 / (r - 0.07)

40 * (r - 0.07) = 4

40r - 2.8 = 4

40r = 4+2.8

r = 6.8 / 40

r = 0.17 or 17%

MV of debt = 40 million * 96.5%  => $38.6 million

Total MV of capital structure = 38.6 + 1200 = 1238.6 million

WACC = 38.6/1238.6  *  0.08  *  (1-0.33)  +  1200/1238.6  *  0.17

WACC = 0.16637 OR 16.637%

4 0
3 years ago
"Which of the following is correct?
ICE Princess25 [194]

Answer: Option (B) is correct.

Explanation:

The nominal GDP is equal to the real GDP in the base year, that's why GDP deflator in the base year is equal to 100.

GDP deflator is calculated as the nominal GDP divided by the real GDP multiply by 100. It is shown as:

GDP deflator = \frac{Nominal\ GDP}{Real\ GDP} \times 100

GDP deflator would be used as the conversion factor that transformed the real GDP into nominal GDP.

5 0
3 years ago
Cyclical unemployment is BEST described as unemployment arising from
Ira Lisetskai [31]

Answer:

Contraction cycle or Recession

Explanation:

The cyclical unemployment is due to the cycles of economy ( expantion:Grow and contraction: recession) Under these circumstances unemployment is considered normal as the economy cannot sustain itself always in an expansion cycle.

3 0
3 years ago
SHAPE magazine is targeted at young women seeking healthier lifestyles. At a price of $3 per copy, 1.25 million copies are sold.
Lerok [7]

Answer:

A. $ 3,750,000

Explanation:

Given that

At lower price

A copy is $3

Copies sold = 1.25 million

Recall that

Total revenue = Price of good × quantity of goods sold.

That is, the total amount of money a seller obtains by selling goods or/and services to a buyer(s)

Thus

Total revenue at low cost

= 3 × 1.25 million

= 3.75 million

= $3,750,000

3 0
3 years ago
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