Firms exit a competitive market when they incur an economic loss. In the long run, this exit means that the economic losses of the surviving firms
A) increase.
B) decrease until they equal zero.
C) decrease until economic profits are earned.
D) do not change.
E) might change but more information is needed about what happens to the price of the good as the firms exit.
B
You might also like to view...
Assume a closed economy, that taxes are fixed, and the marginal propensity to consume is equal to 0.8. What is the government spending multiplier?
A) 10 B) 5 C) 4 D) 3
A perfectly competitive industry achieves allocative efficiency when
A) goods and services are produced at the lowest possible cost. B) goods and services are produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it. C) it produces where market price equals marginal production cost. D) firms carry production surpluses.
(Last Word) According to the Austrian School, the best explanation for what caused the Great Recession was that:
A. tax rates that were too high discouraged spending. B. government spending that was too low created insufficient public capital. C. interest rates that were too low induced excessive borrowing. D. interest rates that were too high discouraged firm borrowing and investment.
Due to a decrease in the birthrate, the Tiny Feet Company expects a decrease in the sale of its baby booties over the next few years. The Tiny Feet Company will most likely
A. keep current production constant, but plan to decrease production in the future. B. decrease current production. C. not change its current investment plans, but plan to decrease investment in the future. D. increase current production so that it can decrease production in the future.