In a monopolistic competitive industry, short-run economic profit encourages entry of new firms until there are no economic profits in the long-run
a. True
b. False
Indicate whether the statement is true or false
True
You might also like to view...
Steve holds 100 shares of a company that currently trade at $10 . There is a 50 percent probability of the market price increasing to $15 within the next quarter. If Steve waits for the market price of shares to increase before selling them off, he would be considered risk averse
Indicate whether the statement is true or false
When a firm is earning economic profit, this indicates the firm is
a. increasing the value of the resources that it is using. b. reducing the value of the resources that it is using. c. supplying the market with a low quality product. d. creating less value for consumers than another firm that is currently earning losses.
A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive. Then, the price rises to $25, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, its
a. quantity of output is higher than it was previously. b. average total cost is higher than it was previously. c. marginal revenue is higher than it was previously. d. All of the above are correct.
A country producing a combination of 5 units of guns and 6 units of butter would be _________________ (outside/on/inside) the production possibilities curve.
