In the long run, the entry of new firms in an industry
A) harms consumers by forcing prices up above the level of average cost.
B) benefits consumers by forcing prices down to the level of total cost.
C) harms consumers by forcing prices up above the level of total cost.
D) benefits consumers by forcing prices down to the level of average cost.
Answer: D
You might also like to view...
Describe some of the features hindering developing countries from growing faster
What will be an ideal response?
If labor supply and labor demand both increase, employment
a. and the real wage rate will both increase b. will increase but the real wage rate will fall c. will increase but the real wage rate will remain constant d. and the real wage rate will remain constant e. will increase but the effect on the real wage rate will depend on the magnitude of the shifts
If the supply price of land is zero, including costs of transporting goods produced on the land to the market, then
a. positive rents are paid for the acres furthest from the market b. there are no rent-yielding acres c. the demand for land must be infinitely high d. population growth must be high e. landowners will reap higher rents
When does a subsidy that benefits consumers result in a more efficient allocation of a resource?
A) when the good being produced or consumed is not scarce B) when the good being produced or consumed generates a negative externality C) when the good being produced or consumed generates a positive externality D) when the equilibrium price of the good is one that consumers don't like