If firms are earning economic profit in a monopolistically competitive market, which of the following is most likely to happen in the long run?
A) Some firms will leave the market.
B) Firms will join together to keep others from entering.
C) New firms will enter the market, thereby eliminating the economic profit.
D) Firms will continue to earn economic profit.
C
You might also like to view...
How does an increase in competition in an industry usually affect productivity?
What will be an ideal response?
Refer to the given graph. A movement from a to b along C 1 might be caused by a(n):
A. recession.
B. wealth effect of an increase in stock market prices.
C. increase in income tax rates.
D. increase in real GDP.
The judging of an individual on the basis of the average characteristics of the group to which the individual belongs rather than the individual's characteristics is:
A. Statistical discrimination B. Reverse discrimination C. Human capital discrimination D. Wage discrimination
Trade diversion results in
A) an increase in the total amount of trade in the world. B) a decrease in the total amount of trade in the world. C) no change in the total amount of trade in the world. D) either an increase or decrease in the amount of trade in the world, depending on where trade takes place.