If price is less than average cost in a monopolistically competitive market:
A. there is an incentive for firms to exit the market.
B. there is profit incentive for firms to enter the market.
C. the market must be in long-run equilibrium.
D. there is no incentive for the number of firms in the market to change.
Answer: A
You might also like to view...
Increasing income tax rates will solve the "Social Security time bomb issue" is an example of
A) a positive economic statement. B) marginal cost exceeding marginal benefit. C) answering the "how" question. D) globalization. E) business economic policy.
The pattern of protection in industrial countries is particularly harmful to the interests of
A) low-income developing countries. B) high-income industrial countries. C) Asian nations. D) European nations. E) None of the above.
A type of ________ problem that occurs when a person or institution has multiple objectives that conflict with each other is called ________
A) moral hazard; conflicts of interest B) adverse selection; conflicts of interest C) moral hazard; spinning D) adverse selection; spinning
Technically speaking, if price > AVC, then
a. TR > TC b. profit is positive c. TR > TVC d. profit is negative e. the firm should shut down