Assume the market for orange juice is perfectly competitive. Orange juice producers currently earn a zero economic profit. Orange juice producers will likely begin to earn economic profits in the short run, and some producers will enter the industry until all firms in the industry earn a zero economic profit, if consumers
A. do not change their demand for orange juice.
B. switch from orange juice to grape juice.
C. switch from grape juice to orange juice.
D. All of the above are correct.
Answer: C
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It is unlikely that players will attain the Stackelberg equilibrium if
a. both players have a dominant strategy. b. the Stackelberg equilibrium is Pareto preferred to the Nash equilibrium. c. the second player cannot be assured that the first player is committed to his strategy. d. there is an advantage to being the second player.
In the current international monetary system, what is the role for gold?
a. The system is a gold-exchange standard, based on a fixed value for a key currency. b. Gold backs each currency, and therefore, the system as a whole. c. It serves as the principal reserve asset. d. It has no role.
The idea that a shift in aggregate demand affects both inflation and unemployment is consistent with
A. The consensus view of the economy. B. The Keynesian view of the economy. C. A vertical aggregate demand curve. D. The monetarist view of the economy.
The short-run is a period of less than one year.
Answer the following statement true (T) or false (F)