Assume the market for beef is perfectly competitive. Beef producers are currently earning a zero economic profit. If consumers switch from beef to chicken, which of the following is most likely to occur?
A. Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning an economic profit.
B. Beef producers will incur economic losses in the short run. Some producers will exit the industry until those remaining are earning a zero economic profit.
C. Beef producers will now earn economic profits in the short run, and there will be no additional adjustments in the long run.
D. Beef producers will now incur economic losses in both the short run and the long run.
Answer: B
You might also like to view...
Suppose consumer cannot taste the difference between Miller Lite and Bud Light, but Miller Lite is sold in 12 ounce cans while Bud Light is sold in 8 ounce cans. In a graph with cans of Miller Lite on the horizontal and cans of Bud Light on the vertical axis, which of the following is the correct slope for this consumer's indifference curves:
A.
B.
C.
D.
The greater the marginal propensity to consume (MPC) in the economy, the greater the spending multiplier
a. True b. False Indicate whether the statement is true or false
Firm A and Firm B are the only two producers of a new solar powered cell. Society will gain the most when both firms decide to: a. form a cartel
b. merge. c. differentiate their products. d. produce at the downward-sloping part of their respective average total cost curves.
If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that
a. the poor family should pay more in taxes to pay for public education than the rich family. b. the rich family should pay more in taxes to pay for public education than the poor family. c. the benefits of private school exceed those of public school. d. public schools should be financed by property taxes.