Why can a firm in monopolistic competition make an economic profit only in the short run?
What will be an ideal response?
A firm in monopolistic competition can make an economic profit only in the short-run because economic profit induces entry, which decreases the demand for the firm's product, lowers its profit-maximizing output, price, and economic profit. In long-run equilibrium, when entry ends, each firm makes zero economic profit.
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Four stores have a problem with theft and security is a public good. Let S stand for the number of person-hours of security patrols per week. The marginal benefit of security patrols to each of the stores is given by the formula MB = 200 - 2S. Patrols cost $20 per hour. If each store provided security independently, how much would each store provide?
A. 90 person-hours of patrols per week B. 100 person-hours of patrols per week C. 92.5 person-hours of patrols per week D. 97.5 person-hours of patrols per week
Which of the following about trade is true?
What will be an ideal response?
Over time, foreign investment is credited with the greatest contribution to economic growth in the United States.
Answer the following statement true (T) or false (F)
Suppose that there is only one seller in the computer industry. If the demand curve that the only seller in the industry faces is a straight-line, downward-sloping curve, at which point would the seller's total revenue be maximized?
A. at the highest point on the demand curve, where price is the highest B. at a point high on the demand curve, where elasticity is elastic C. at the midpoint of the demand curve, where elasticity is unitary D. at a point low on the demand curve, but not at the very bottom