Which of the following is true for a perfectly competitive market in long-run equilibrium?
A. There is no incentive for new firms to enter the market.
B. Each firm in the market earns zero economic profit.
C. There is no incentive for existing firms to leave the market.
D. All of these are correct.
Answer: D
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There are currently 1,000 firms in a competitive industry. Minimum long-run average cost is $80 and price $100. Explain what will happen to price, profit, and the number of firms in this industry over time.
What will be an ideal response?
Personal income is:
a. total income received by households before taxes. b. the amount households have available for consumption, savings, and payment of personal taxes. c. national income minus corporate profits and Social Security (FICA) plus transfer payments, and other income. d. all of these.
As long as additional workers are attracted into the labor force by higher wages, the market labor supply curve is
A. Perfectly inelastic. B. Horizontal. C. Upward-sloping. D. Downward-sloping.
Which of the following features does a free-trade area necessarily have?
A. Absence of trade barriers among the member nations B. Harmonization of all economic policies C. Free movement of factors of production across the member nations D. Equal tariff rates