In the short run
A. if current firms are earning a profit, new firms will enter the industry.
B. firms act to minimize losses or maximize profits.
C. all firms that earn a loss will shut down.
D. All of the above are correct.
Answer: B
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The division of the burden of a sales or excise tax on demanders and suppliers:
a. Is always equal. b. Is always higher for demanders. c. Is always higher for suppliers. d. Depends on the shapes of the demand and supply curves.
For an inferior good, a decrease in demand is caused by
A) a rise in income. B) a fall in income. C) a rise in price. D) a fall in price.
Samantha is at a friend's house for dinner. Her friend says "I can re-heat either the lasagna or the fried rice." Samantha likes them both, but chooses the fried rice. Does Samantha's choice entail a cost?
A) No—as long as her friend didn't charge Samantha for the meal. B) Yes—Samantha sacrificed the opportunity to eat lasagna. C) Yes—as long as Samantha reimburses her friend for the cost of re-heating the meal. D) Both A and C above.
When demand is ________, a decrease in price ________ total revenue
A) elastic; decreases B) inelastic; decreases C) unit elastic; increases D) elastic; does not change