When a perfectly competitive firm experiences zero economic profits
A. the high barriers to entry prevent further competition.
B. existing firms exit the industry.
C. additional firms enter the industry.
D. firms have no incentive to exit or enter the industry.
Answer: D
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Under a flexible exchange rate regime, an increase in real money demand
A) moves the AA curve to the right. B) moves the AA curve to the left. C) leaves the AA curve unchanged. D) moves the DD curve to the right. E) moves the DD curve to the left.
One requirement for an effective nominal anchor is ________
A) price stability B) credibility C) fixed exchange rates D) rational expectations
Figure 11.4Figure 11.4 depicts demand and costs for a monopolistically competitive firm. At the profit maximizing output level:
A. the firm is making a positive economic profit. B. the firm is earning a zero economic profit. C. the firm is earning a negative economic profit. D. There is not sufficient information.
When social costs for using a scarce resource are included, then there is
A. a decrease in the price of the good. B. a decrease in the production of the good. C. a negative externality. D. a positive externality.