What happens in the long run if firms in a monopolistically competitive industry are earning positive economic profits? Explain
What will be an ideal response?
If firms in a monopolistically competitive industry are earning positive economic profits, new firms will be attracted to the market. As new firms enter, the demand curve facing each existing firm begins to shift left. This process continues until all profit is eliminated.
You might also like to view...
James has a comparative advantage in the production of corn, while Harry has a comparative advantage in the production of bread. If James and Harry decide to trade with each other, _____
a. both Harry and James will enjoy gains from trade b. only Harry will enjoy gains from trade c. only Harry will suffer losses from trade d. only James will suffer loses from trade e. neither of them will gain from trade
Which of the following is true of a production possibilities curve?
a. It reveals the maximum amount of any two goods that can be produced from a fixed quantity of resources. b. It reveals the ideal level of technology for a country. c. It assumes that the prices of the two products are equal. d. For a country that could produce many different goods, it shows which two goods are most important to produce.
One In the News article in the text titled "The Real March Madness: Ticket Prices " described how professional scalpers use the Internet to sell hard-to-get tickets to concerts and sporting events. Apparently the initial price of the tickets being scalped was too
A. High for equilibrium, resulting in a surplus of tickets. B. Low for equilibrium, resulting in a shortage of tickets. C. Low for equilibrium, resulting in a surplus of tickets. D. High for equilibrium, resulting in a shortage of tickets.
A utility-maximizing consumer buys so as to make ________ for all pairs of goods.
A. TUx/Px = TUy/Py B. MUx = MUy C. MUx/MUy = Px/Py D. Px(MUx) = Py(MUv)