Comment on the following statement: "When firms are earning positive profits, the industry supply curve will shift to the right."
What will be an ideal response?
The statement is true. When firms in perfectly competitive industries are earning positive profit, there is an incentive for firms to expand their scale of operation and for new firms to enter the industry. Thus, the industry supply will rise.
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Refer to the graph shown. Demand is unit elastic when revenue is:
A. $4,000. B. $10,000. C. $6,000. D. $8,000.
If aggregate expenditure was less than GDP, which of the following would happen?
a. Inventories would shrink and GDP would drop in future periods. b. Inventories would grow and GDP would drop in future periods. c. Inventories would shrink and GDP would increase in future periods. d. Inventories would grow and GDP would increase in future periods. e. Inventories would not change and GDP would drop in future periods.
Which of the following views most likely would belong to a behavioral economist?
A. Governments should never intervene in a housing bubble. B. When people spend too much, they are just reflecting their wants. C. More growth is needed to make society better off. D. Change the institutional structure to get people to save more.
As a firm grows larger
A. economies of scale set in, then diseconomies of scale. B. diseconomies of scale set in, then economies of scale. C. economies of scale and diseconomies of scale set in at the same time. D. neither economies of scale nor diseconomies of scale set in.