If monopolistically competitive firms earn short-run economic profits, we expect to see
A. new firms trying to enter the industry, but unable to do so because of barriers to entry.
B. existing firms altering their scale of plant to try to capture larger profits. The combined effect is to cause all firms to earn zero economic profits.
C. existing firms increasing prices to try to capture larger economic profits.
D. new firms enter the industry, which shifts the demand curves of the existing firms to the left until firms earn zero economic profits.
Answer: D
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Some prescription drugs sell for more in the United States than they do in other countries. Which of the following statements about this issue is most likely to be true?
a. Drug companies are engaging in price discrimination, and this practice certainly reduces global social welfare. b. Global social welfare could be improved if the price in the United States were reduced to the price charged in other countries. c. Global social welfare could be improved if the price in the other countries were increased to the price charged in the United States. d. Drug companies are engaging in price discrimination, but this might improve global social welfare if it gives more people access to the drugs.
If a perfectly competitive market had 10,000 identical firms, the market supply curve would be ______ times the quantity supplied by each firm.
a. 5,000 b. 10,000 c. 20,000 d. 100,000
If trade is consistent with the Heckscher-Ohlin (H-O) theory, then growth in a country's scarce factor of production will lead to
A. balanced growth. B. a deterioration in the country's terms of trade. C. a decreased willingness to trade. D. an increased willingness to trade.
In 2010, regulators of many nations agreed on a major update of internationally active banks known as:
A. the Dodd-Frank Act. B. the Fred-Bob Act. C. Basel III. D. the Gramm-Leach-Bliley Act.