In a perfectly competitive market, positive economic profits act to
A. attract new entrants into the industry.
B. prevent reinvestment on the part of firms within the industry.
C. drive potential competitors away from the industry.
D. signal resource owners elsewhere not to invest their capital in this industry.
Answer: A
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Under conditions of perfect competition, marginal revenue
a. exceeds average revenue. b. is less than average revenue. c. always exceeds marginal cost. d. equals average revenue.
The relationship between the government deficit and the change in the monetary base is
A) deficit equals change in government debt held by the public minus change in monetary base. B) deficit equals change in government debt held by the public plus change in monetary base. C) deficit equals change in government debt outstanding plus change in monetary base. D) deficit equals change in government debt outstanding minus change in monetary base.
Assume that Sofia's marginal utility from pizza consumption is 10 utils and the price is $2.00 per slice. Further, assume that her marginal utility from scone consumption is 20 utils and the price is $3.00 per scone. Which of the following is true? a. With her existing budget she should increase her consumption of pizza
b. With her existing budget she should increase her consumption of scones. c. She is currently maximizing her utility and should not change the amount of consumption for either good with her current budget. d. If her budget increases, she should increase her consumption of pizza but not scones. e. If her budget increases, she should increase her consumption of scones but not pizza.
Refer to the above graph. When the quantity of product X sold increases from 14,000 to 16,000, the price elasticity of demand for product X is:
A. perfectly inelastic. B. unit-elastic. C. inelastic. D. elastic.