When some firms leave a perfectly competitive market, the price:
A. increases, and profits of those left fall.
B. falls, and profits of those left rise.
C. falls, and profits of those left fall.
D. increases, and profits of those left rise.
Answer: D
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Indicate whether the statement is true or false
Richard Voith estimated the price elasticity of demand for round-trip rail fare to be 0.62. If fares rose by 30 percent, one would expect the quantity of round-trip tickets purchased to:
A. rise by 18.6 percent. B. fall by 48.4 percent. C. fall by 18.6 percent. D. rise by 48.4 percent.
Historically, investment in stocks have been a prudent investment
A. because stock prices have stayed roughly constant over time. B. because stock prices have generally risen over time. C. because stocks no longer carry any underlying risk. D. because stocks can easily be converted to corporate bonds.
Why do major-league baseball players get paid more than minor-league players?
a. Major-league players are better athletes. b. The higher wage reflects a compensating differential. c. Playing in the major leagues in more pleasant then playing in the minor leagues. d. The higher wage is often due to educational discrepancies.