If monopolistically competitive firms earn short-run economic profits, we expect to see
A) new firms enter the industry, which shifts the demand curves of the existing firms to the left until firms earn zero economic profits.
B) new firms trying to enter the industry, but unable to do so because of barriers to entry.
C) existing firms altering their scale of plant to try to capture larger profits. The combined effect is to cause all firms to earn zero economic profits.
D) existing firms increasing prices to try to capture larger economic profits.
Answer: A
You might also like to view...
The lower the nominal interest rate, the
A) greater the quantity of money supplied. B) greater the demand for money. C) smaller the demand for goods and services. D) smaller the quantity of money demanded. E) greater the quantity of money demanded.
The urban consumers that the CPI is based on does not include:
A. the unemployed. B. the retired. C. persons in prison. D. the CPI does not include any of these.
Suppose the demand for hard-wood flooring increases, while the demand for wall-to-wall carpeting decreases. Based on this change in consumer tastes, the demand for hard-wood-flooring factory workers in North Carolina increases, while the demand for carpet factory workers in Georgia decreases. This is an example of
a. frictional unemployment created by efficiency wages. b. structural unemployment created by efficiency wages. c. frictional unemployment created by sectoral shifts. d. structural unemployment created by sectoral shifts.
Fill in the table.
