As more firms enter an industry:
A. prices rise.
B. economic profits decrease.
C. accounting profits increase.
D. None of the statements associated with this question are correct.
Answer: B
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"The dramatic reduction of the money supply during the 1930s was responsible for the Great Depression. The macroeconomy is intrinsically stable if left alone by the prying hand of government. The Federal Reserve Board, instead of tightening money during booms and loosening money during recessions (policies that are ineffective due to time lags), should simply increase the supply of money at a
steady rate of 3 to 5 percent per year.". This statement reflects which school of thought? a. The traditional Keynesians b. The monetarists c. The traditional classicals d. The new Keynesians e. The new classicals
If average variable cost exceeds price for a perfectly competitive firm in the short run, then it could increase profits by raising its price
a. True b. False
Less money supply
What will be an ideal response?
Roger owns a small health store that sells vitamins in a perfectly competitive market. If vitamins sell for $12 per bottle and the average total cost per bottle is $12.50 at the profit-maximizing output level, then in the long run
a. more firms will enter the market. b. some firms will exit from the market. c. the equilibrium price per bottle will fall. d. average total costs will fall.