When a perfectly competitive market is in its long-run equilibrium, the fact that the firms make zero economic profit will
A) encourage new firms to enter the market.
B) cause existing firms to shut down.
C) cause existing firms to leave the market.
D) mean that the firms' owners earn a normal return.
D
You might also like to view...
Refer to Figure 27-7. Given that the economy has moved from A to B in the graph above, which of the following would be the appropriate fiscal policy to achieve potential GDP?
A) increase government spending B) contractionary fiscal policy C) increase taxes D) decrease interest rates
In the above figure, if the firm is producing at Q3 and charging a price of P3, it should
A) increase output and decrease price. B) decrease output and increase price. C) not change output or price. D) shut down.
You originally required a risk premium of 6 percent in addition to the rate of return on safe assets before you would purchase shares of Techno Company stock. If you and other investors reduce the risk premium you require to 4 percent, the price of Techno Company stock will:
A. equal the old risk premium plus the new risk premium. B. equal the new risk premium plus the rate of return on safe assets. C. increase. D. decrease.
One of the main arguments against further growth for industrialized nations focuses on the issue of:
A. infrastructure development. B. feedback mechanisms. C. technological knowledge. D. environmental quality.