The force that leads to zero economic profits for monopolistically competitive firms in the long run is
A. excess capacity.
B. price wars among firms.
C. entry by new firms.
D. excessive advertising.
Answer: C
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A firm that wished to calculate the present value of its future nominal profits should use the ____ to do so
a. real interest rate b. nominal interest rate c. nominal interest rate minus the expected inflation rate d. real interest rate minus the expected inflation rate
The Friedman natural rate theory implies that there is a tradeoff between inflation and unemployment in
A) neither the short run nor the long run. B) both the short run and the long run. C) the short run, but not in the long run. D) the long run, but not in the short run.
There are very few, if any, good substitutes for motor oil. What does this imply?
a) The supply of motor oil would tend to be price elastic. b) The demand for motor oil would tend to be price elastic. c) The demand for motor oil would tend to be price inelastic. d) The demand for motor oil would tend to be income elastic.
Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is $8; Kyle's cost per ton is $12. Refer to the information given. If the market
price of sockeye salmon is $15 per ton, and Kara and Kyle both catch their quota, their combined profit will be: A. $6,000. B. $14,000. C. $20,000. D. $30,000.