Because economic profits are eliminated in the long run in monopolistic competition, to earn an economic profit firms continuously
A) shut down.
B) exit the industry.
C) innovate and develop new products.
D) declare bankruptcy.
E) decrease their costs by decreasing their selling costs.
C
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The debt-GDP ratio
A) fell sharply after 1997 due to a high output ratio and higher income tax rates. B) rose from 1981-1992 due to large budget deficits. C) began to decline in 1993. D) all of the above.
The value of the absolute price elasticity of demand for good X is 3. The absolute price elasticity for good Y is 2. Which good's quantity demanded is less responsive to a change in price?
A) Good X B) Good Y C) They are equally responsive. D) Not enough information is given.
Consider the market for nonalcoholic beers from the previous question. Boors' price in a Nash equilibrium (assuming Bertrand competition in these differentiated beers) is about
a. 1.71 b. 2.55 c. 3.55 d. 4.29
Which of the following will increase the demand for large automobiles?
a. A fall in the price of small automobiles. b. A rise in insurance rates for large automobiles. c. A fall in the price of large automobiles. d. A rise in buyers' incomes (assuming large automobiles to be a normal good).