In a perfectly competitive industry, economic profit
A. Can persist in the long run because of homogeneous products.
B. Will always be negative in the long run because of ease of entry.
C. Can persist in the long run because of barriers to entry.
D. Will approach zero in the long run as more firms enter the market.
Answer: D
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In the figure above, a firm is operating at point A on the graph. At point A, the firm's average cost curve
A) has negative slope. B) has positive slope. C) is horizontal. D) is vertical.
Suppose Cournot duopolist firms operate with each having a cost of 30qi (i = 1,2 ) so that each firm's marginal cost is 30. The inverse market demand curve is P = 120 - Q where Q = q1 + q2
Suppose there were no barriers to entry and firms continued to enter so long as there were positive economic profits. At the Nash-Cournot equilibrium, the total output, Q, is A) 30. B) 45. C) 60. D) 90.
Product differentiation plays an important role in perfect competition
Indicate whether the statement is true or false
The short-run aggregate supply line is:
A. upward sloping. B. downward sloping. C. horizontal at the current rate of inflation. D. vertical at the economy's potential output.