Free entry implies that
A. if firms in an industry are making excessively high profits, new firms are likely to enter the industry.
B. the government regulates the number of firms that are allowed in an industry.
C. a perfectly competitive firm can never earn a profit.
D. firms will always earn a profit, as new firms can enter the industry at any time they like.
Answer: A
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Rational ignorance suggests that voters will
A) be ignorant about all issues. B) be ignorant about issues that are of no special interest to them. C) pursue information on all issues before voting. D) avoid voting if they have no information.
Before the financial crisis of 2007, inflation was on the rise. According to the MP curve, this would lead to ________
A) an increase in the real interest rate B) an upward shift of the MP curve, if policymakers opted for autonomous tightening C) a decrease in aggregate output D) all of the above E) none of the above
If we observe an economy adjusting to potential GDP as prices fall and real output increases, we can conclude that _____
a. the economy was experiencing an expansionary gap b. there is a labor surplus c. the economy was experiencing a recessionary gap d. self-correction is not the process that is occurring e. there are widespread labor shortages
Refer to Table 4.1. If Mike starts with 3 CDs and 2 economics books, would he be willing to trade one CD for an economics book?
A. Yes, because the bundle with 2 CDs and 3 economics books is ranked higher than the bundle with 3 CDs and 2 economics books
B. No, because the bundle with 2 CDs and 3 economics books is ranked higher than the bundle with 3 CDs and 2 economics books
C. Yes, because the bundle with 3 CDs and 2 economics books is ranked higher than the bundle with 2 CDs and 3 economics books
D. No, because the bundle with 3 CDs and 2 economics books is ranked higher than the bundle with 2 CDs and 3 economics books