Explain the concept of 'creative destruction' by innovation. Does it ensure positive economic profits in the long run?
Creative destruction begins when the alert innovative entrepreneur creates or recognizes a new and better product, acquires it, and brings it to market, where it makes older substitutes obsolete. As the first provider of the improved product, the entrepreneur initially faces little or no competition, and the resulting monopoly power enables the entrepreneur to sell the new product at a price that is high relative to its costs and yields abundant profit. This generous profit gets the attention of other individuals with entrepreneurial ambitions, who seek to enter the market with competitive and imitative products. This competitive entry first reduces and finally brings to an end the temporary excess of price over the competitive level that was initially enjoyed by the entrepreneur.
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If credit card usage exhibits a sharp increase, there is
A) an upward movement along the demand for money curve. B) a rightward shift of the demand for money curve. C) a leftward shift of the demand for money curve. D) a downward movement along the demand for money curve. E) a leftward shift of the supply of money curve.
The Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)
a. is the primary law that governs U.S. pesticide policy b. uses registration of new pesticides and reregisration of existing pesticides as its chief regulatory instruments c. was revised through the Pesticide Registration Improvement Act of 2003 d. all of the above e. none of the above
In the long run, a firm should exit the industry if its total costs exceed its total revenues
a. True b. False Indicate whether the statement is true or false
When a monopolistically competitive firm is in long-run equilibrium,
a. price is equal to average total cost. b. price is equal to marginal cost. c. price is equal to marginal revenue. d. the firm operates at its efficient scale.