Why are firms in monopolistic competition unable to make an economic profit in the long run?
What will be an ideal response?
While firms in monopolistic competition do not produce an identical product, such as perfectly competitive firms do, they face the same problem other competitive firms face: freedom of entry. When firms in monopolistic competition are making an economic profit, other firms enter the market. Entry decreases the demand for the products of the existing firms and thereby decreases their economic profit. Firms will continue to enter the market until the economic profit equals zero.
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Bonzo is in business for himself making and selling Easter baskets. His daily cost for wicker is $100 and his daily revenue is $120. Bonzo quit his job at the Basket Weaving factory where he earned $15 a day, to enter the Easter basket business. Given this information, we know that his accounting profit
a. is $120 and his economic profit is $105. b. and economic profit are both $20. c. is $20 and his economic profit is $5. d. and economic profit are both $5.
Which of the following statements is true about patents and copyrights? (i) They have benefits and costs. (ii) They lead to higher prices. (iii) They enhance the ability of monopolists to earn above-average profits
a. (i) and (ii) only b. (ii) and (iii) only c. (ii) only d. (i), (ii), and (iii)
If you intend to begin jogging one week from today, and next week tell yourself you'll begin in another week, your preferences are:
A. more accurate in the future. B. revealed from your actions. C. time inconsistent. D. irrational.
Explain the term “laissez faire capitalism.”
Please provide the best answer for the statement.