Describe the transition from short-run to long-run equilibrium in a monopolistically competitive industry
What will be an ideal response?
In the short run, firms in a monopolistically competitive industry may make a positive profit. However, since there are assumed to be no significant barriers to entry, positive profits attract entry. As more firms (or varieties) enter, the demand for each firm (or variety) decreases, and thus prices and profits fall until there is no further incentive for entry.
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From 1800-1860 which part of the nation was most opposed to high tariffs?
a. South. b. New England. c. Middle Atlantic States. d. Far Western States.
According to the graph shown, if this economy were an autarky, consumers would get area:
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
A. A in consumer surplus.
B. ABC in consumer surplus.
C. ABCD in consumer surplus.
D. ABCDEFG in consumer surplus.
During the sixteenth century, Spanish conquistadors like Hernando Cortes overwhelmed the Aztecs and other indigenous peoples in America by pillaging their cities, and taking their gold and silver. The gold and silver was sent back to Spain, causing its
money supply to increase tenfold. Assuming V remained stable and Q increased slightly, what do you think happened to prices in Spain during this period?
When an economist says a firm is earning zero economic profit, this implies that the firm
a. will be forced out of business in the near future unless market conditions change. b. is earning a zero rate of return on its assets. c. is earning as high a rate of return now as could be earned in other industries. d. has an accounting profit of zero.