If a typical firm in a perfectly competitive industry is incurring losses, then
A) some firms will enter in the long run, causing market supply to increase and market price to rise increasing profit for all firms.
B) some firms will exit in the long run, causing market supply to decrease and market price to fall increasing losses for the remaining firms.
C) some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms.
D) all firms will continue to lose money.
C
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An open market purchase of securities by the Fed leads to all of the following EXCEPT
A) an initial increase in excess reserves. B) an increase in bank lending. C) a decrease in the quantity of money. D) an increase in banks' reserves. E) an increase in the monetary base.
Ford Motor Company announces that next month it will offer $3,000 rebates on new Mustangs. As a result of this information, today's demand curve for Mustangs
a. shifts to the right. b. shifts to the left. c. shifts either to the right or to the left, but we cannot determine the direction of the shift from the given information. d. will not shift; rather, the demand curve for Mustangs will shift to the right next month.
A situation in which a private cost diverges from a social cost is
A. a transactions cost. B. an internality. C. an externality. D. internal costs.
According to the circular flow, the value of total output produced and total income
A) will be equal. B) should increase by the unanticipated rate of inflation. C) should differ by the value of intermediate goods. D) will always be increasing in a capitalist economy.