If firms under perfect competition are receiving positive economic profits in the short run, then which of the following will occur in the adjustment to perfect competition in the long run?
a. Some firms will exit, decreasing the market supply curve and driving up market price until economic profits are eliminated and there is no additional motive for exit.
b. Some firms will enter, increasing the market supply curve and driving down market price until economic profits are eliminated and there is no additional motive for entry.
c. Barriers to entry will prevent firms from entering the industry, the existing firms will earn positive profits in the long run.
d. Some firms will enter the industry, but market price will remain unchanged. Therefore all firms will earn normal profits in the long run.
b
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Refer to Figure 15-9. What is the economically efficient output level?
A) 600 units B) 800 units C) 940 units D) 1160 units
According to the above table, there is an excess quantity demanded of 1500 DVDs at the price
A) $14. B) $12. C) $10. D) $8.
If government unemployment insurance payments did not rise during a? recession,
What will be an ideal response?
If the Fed wants to increase the lending capacity of the system by $60 billion and the reserve requirement is 10 percent, it should
A. Sell $6 billion in bonds to the public. B. Buy $60 billion in bonds from banks. C. Sell $60 billion in bonds to the public. D. Buy $6 billion in bonds from banks.