The existence of economic profits in a perfectly competitive industry
A. will signal resources to flow into that industry.
B. gives the investors in that industry a return on investment that just covers opportunity costs.
C. indicates an inelastic demand for the industry's products.
D. indicates that economic resources are being used efficiently in that industry.
A. will signal resources to flow into that industry.
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An entry barrier exists when firms in an industry charge the lowest price possible for their products
Indicate whether the statement is true or false
While much of New Classical macroeconomics is being refuted by the evidence, at least one part of it may be a permanent legacy to all macroeconomists: the assumption of
A) continuous clearing of all markets. B) rational expectations. C) the unimportance of nominal variables. D) supply shocks as the main cause of business cycles.
Which of the following is NOT true about a certificate of convenience and public necessity?
A) It is a barrier to entry. B) It is a patent. C) It is issued by a government agency. D) It limits competition.
Economist A says that the economy is self-regulating. This economist most likely believes that
A) the economy can get stuck in a recessionary gap. B) wages and prices are inflexible downward. C) wages and prices are flexible. D) government should enact expansionary fiscal policy when the economy is in a recessionary gap. E) none of the above