What type of profit can a firm in monopolistic competition make in the long run? Explain your answer
What will be an ideal response?
In the long run, a firm in monopolistic competition can make only zero economic profit. It cannot make an economic profit because there are no barriers to entry. If a firm in monopolistic competition is making an economic profit, in the long run new firms enter the market, produce a similar product, and decrease the demand for the initial firm's product. Entry continues until the firms make zero economic profit, that is, their owners make a normal profit.
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Which of the following would show the LEAST amount of inequality?
A) Measured annual income. B) Measured annual wealth. C) Lifetime income. D) Measured annual income and annual wealth are equally distributed and are more equally distributed than lifetime wealth.
Refer to Figure 10.9. Other things equal, a negative demand shock is best represented as a change in equilibrium from
A) point A to point B. B) point A to point D. C) point C to point B. D) point C to point D.
Vertical contracts between manufacturers and retailers often aim to
a. Serve as a "signal" of the manufacturer's belief of the likely success of his product b. Reward the retailer for undertaking the risk inherent in introducing a new product c. Reimburse the retailer for the cost of managing an extended inventory d. All of the above
A Nash Equilibrium always results in the highest total profit for the firms in an oligopoly market
a. True b. False Indicate whether the statement is true or false