Which of the following statements is TRUE about the economic profits earned by a monopolistic competitor firm in the long run?
A) Economic profits can be positive since firms have some degree of monopoly power.
B) Economic profits will be positive since the firm has a downward sloping demand curve.
C) Economic profits will tend towards zero since positive profits will attract new firms into the industry.
D) Economic profits can be negative since there is so much competition in the market.
C
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Refer to the scenario above. If both economies have identical depreciation rate, then:
A) economy A's steady state equilibrium will lie to the left and above economy B's steady state equilibrium. B) economy A's steady state equilibrium will lie to the right and below economy B's steady state equilibrium. C) economy A's steady state equilibrium will lie to the left and below economy B's steady state equilibrium. D) economy A's steady state equilibrium will lie to the right and above economy B's steady state equilibrium.
The above figure shows the demand curves in four different markets. If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers, which market would produce the smallest amount of deadweight loss?
A) A B) B C) C D) D E) C and D
When the market for gasoline in Motorland is in equilibrium, the deadweight loss is
A) $37,500 per month. B) $150,000 per month. C) $75,000 per month. D) zero.
What are the two effects that explain the law of demand? Briefly explain each effect
What will be an ideal response?