Explain why on average the profit levels for invention and entrepreneurship are generally so low
Although a new invention initially implies a higher rate of return at or near the level of monopoly profits, eventually additional competitors will enter the market producing substitutes. This competition implies that economic profits will move toward zero. In addition, there are a number of inventions that ultimately are not successful. These facts coupled with the excessive optimism of entrepreneurs and non-financial, psychological rewards for invention lead us to expect a low or even negative overall rate of return on invention.
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The average return for supplying entrepreneurial ability is the entrepreneur's
A) accounting profit. B) normal profit. C) explicit profit. D) economic profit.
The rate of production at which marginal revenue equals marginal cost is
A) a point of negative profits for the firm. B) what determines the equilibrium price in the market. C) the firm's shutdown point. D) the point where profits are maximized.
President Reagan was attracted to the theories expounded by the
a. classical school b. Keynesian school c. neo-Keynesian school d. rational expectations school e. supply-side school
The rules established under GATT are enforced by the
a. governments of the nations that are involved in GATT. b. North American Free Trade Association. c. World Trade Organization. d. European Union.