In a competitive market with identical firms,
a. an increase in demand in the short run will result in a new price above the minimum of average total cost, allowing firms to earn a positive economic profit in both the short run and the long run.
b. firms cannot earn positive economic profit in either the short run or long run.
c. firms can earn positive economic profit in the long run if the long-run market supply curve is upward sloping.
d. free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.
d
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It is important to distinguish investment expenditures from consumption expenditures because
A) households invest and business firms consume. B) foreign firms invest and domestic firms consume C) investment, not consumption, increases the natural real GDP. D) consumption, not investment, increases natural real GDP.
Refer to the above figure. Medicare subsidies have increased the price of medical services to Ps. The perceived price on the part of consumers is
A) Ps. B) P0. C) Pd. D) undetermined without more information.
Which of the following will result in an outward shift of the production possibilities curve [PPC]?
a. A decrease in the quantity of resources b. An improvement in the quality of resources c. A fall in education standards d. An unsustainable growth in population e. An increase in unemployment rate
To obtain the net national product (NNP), start with the gross national product (GNP) and subtract:
A. depreciation. B. depreciation and indirect business taxes. C. depreciation, indirect business taxes, and corporate profits. D. depreciation, indirect business taxes, corporate profits, and social insurance contributions.