In perfect competition:
a) Short run supernormal profits are competed away by firms leaving the industry.
b) Short run supernormal profits are competed away by firms entering the industry.
c) Short run supernormal profits are competed away by the government.
d) Short run supernormal profits are competed away by greater advertising.
Ans: b) Short run supernormal profits are competed away by firms entering the industry.
You might also like to view...
Consider the income and substitution effects corresponding to an increase in the price of X. Which of the following are not possible?
a. The substitution effect on X is positive and the income effect is negative. b. The substitution effect on X is positive and the income effect is negative. c. The substitution effect on Y is negative and the income effect on X in negative. d. The income effect on both goods is positive.
The possibility that the managers of a corporation might not always act in the best interest of its owners is an example of the principal-agent problem
Indicate whether the statement is true or false
Elasticity of demand Quantity Price A 4 15 B 12 6
What will be an ideal response?
In the above figure, the equilibrium exchange rate between U.S. dollars and British pounds is
A. A. B. B. C. C. D. W.