How is the short run response to a change in demand or cost condition different from the long run response in a perfectly competitive market?
In the short run, the only response to a change in demand or cost conditions comes from firms already in the market. In the long run, profits will attract new entrants and losses will induce unprofitable firms to leave the market.
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In the long-run, a perfectly competitivel firm will achieve
a. Average rate of return b. Above average profits c. Losses d. Economic Profits
To test the gravity equation of trade, a regression model was calculated for two nations, the United States and Canada, testing the correlation among:
a. regional trade, size of GDP, and distance for states and provinces. b. intra-industry trade, size of GDP, and size of states and provinces. c. bilateral trade and ratio of GDP for states and provinces. d. bilateral trade, size of GDP, and distance for states and provinces.
A public good will:
A. be efficiently provided by the free market as long as its total benefits exceed its total costs. B. be efficiently provided by the free market as long as its marginal benefits exceed its marginal costs. C. be provided in less than efficient quantities by the free market. D. be provided in efficient quantities by voluntary contributions.
Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of $40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson takes the offer that maximizes his expected utility and he is risk-neutral, then
A. he will take the first offer. B. he will take the second offer. C. he is indifferent between the offers-both yield the same expected utility. D. Indeterminate from the given information-we cannot say what he will do.