When a second firm enters a market, the original firm's profits decline because:
A. the original firm's price decreases.
B. the original firm's ATC increases.
C. the original firm's quantity decreases.
D. All of these are correct.
Answer: D
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During the twentieth century, the market structure of the U.S. economy has
A) become less competitive. B) remained about the same. C) become more competitive. D) become mostly monopolies.
Which of the following factors is not a barrier limiting the entry of potential competitors into a market?
a. legally enforced patent rights b. an inelastic demand for a product c. licensing d. control over an essential resource
Sound economic policy is policy that is consistent with
a. good intentions. b. quick action and frequent policy changes until positive results are achieved. c. monetary stability, free trade, and low tax rates. d. saving jobs, protecting domestic industry, and increasing tax revenue.
When Iceland can generate a product using fewer labor hours and resources than the United States, an economist would say that Iceland had
a. a comparative advantage in production of the product.
b. an absolute advantage in production of the product.
c. a higher opportunity cost of producing the product.
d. no incentive to import the product, regardless of the cost-price conditions for other products.