If monopolistically competitive firms earn short-run economic profits, we expect to see
A) new firms enter the industry, which shifts the demand curves of the existing firms to the left until firms earn zero economic profits.
B) new firms trying to enter the industry, but unable to do so because of barriers to entry.
C) existing firms altering their scale of plant to try to capture larger profits. The combined effect is to cause all firms to earn zero economic profits.
D) existing firms increasing prices to try to capture larger economic profits.
A
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Vertical equity in income taxation refers to the notion that persons with different levels of income should be taxed differently
a. True b. False Indicate whether the statement is true or false
The aggregate demand curve is:
A. downward sloping. B. upward sloping. C. a vertical line at potential output. D. a horizontal line at the current price level.
A cartel is
A) a temporary storage facility for automobiles. B) a group of firms that enter into an informal agreement to fix prices to maximize joint profits. C) a group of firms that enter into a formal agreement to fix prices to maximize joint profits. D) an example of a group of firms that collectively regulate a competitive industry.