In the long run when a perfectly competitive firm experiences positive economic profits
A. firms exit the industry, the market supply curve shifts leftward, and the market price rises.
B. firms enter the industry, the market supply curve shifts rightward, and the market price falls.
C. firms exit the industry, the market supply curve shifts rightward, and the market price falls.
D. firms enter the industry, the market supply curve shifts rightward, and the market price rises.
Answer: B
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In the event of excess supply in the coffee market
A) the price of coffee will increase. B) the price of coffee will decrease. C) the supply of coffee will decrease (supply will shift to the left) to meet the demand. D) the demand for coffee will increase (demand will shift to the right) to meet the supply.
Ashton has the utility of wealth curve shown in the above figure. Ashton owns a sports car worth $30,000, and that is his only wealth. Ashton is a careless driver and there is a 30 percent chance that he will have an accident within a year
If he does have an accident, his car is worthless. Suppose all sports cars owners are like Ashton. An insurance company agrees to pay each person who has an accident the full value of their car. The company's operating expenses are $1,000. What is the minimum insurance premium that the company is willing to accept? A) $3,000 per year B) $6,000 per year C) $10,000 per year D) $15,000 per year
The above figure shows the marginal benefits and marginal costs of a college education. What is the amount of the external benefit in the figure?
A) $0 B) $5,000 C) $10,000 D) $15,000
An appropriate Keynesian response to a recessionary gap is to: a. decrease net taxes
b. decrease government spending. c. increase interest rates. d. increase the cash reserve ratio.