In the long run, a monopolistically competitive firm
A. earns zero economic profits.
B. earns negative economic profits.
C. can have positive, zero, or negative profits.
D. earns positive economic profits.
Answer: A
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Even though mass transit systems such as buses are available in most cities in the United States, many residents decide to drive to work in their own vehicles because
A) the opportunity cost of riding a bus is too high for them. B) there is no opportunity cost of them to drive. C) they are not aware of the opportunity cost of driving. D) they do not behave according to the economic way of thinking.
Figure 10-5
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In Figure 10-5, points which lie on the firm’s short-run supply curve are
A. A, B, C. B. C, D, H. C. F, E, G. D. A, C, H.
The rule of thumb for a government deciding whether to provide a public good is that the: a. marginal cost of the good should be less than the marginal benefit
b. opportunity cost of the good should be greater than the marginal benefit. c. sunk cost of the good should be equal to the marginal benefit. d. variable cost of the good should be greater than the sunk cost.