If the firms in a monopolistically competitive industry are earning short-run profit, which of the following is not likely to occur in the long run?
a. New firms will enter the industry.
b. New firms in the industry will draw customers away from existing firms.
c. Existing firms in the industry will face a decrease in demand.
d. Firms will continue to earn profit.
e. Firms will produce with some excess capacity.
D
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Southwest Airlines wants to raise $20 million to finance the renovation of their corporate offices, and the company wishes to raise the funds through direct finance. Which of the following methods could it use?
A) It could issue $20 million in stocks. B) It could sell $20 million in bonds. C) It could borrow $20 million from a bank. D) It could choose either A or B.
An increase in the reserve requirement from 20 percent to 25 percent is most likely to:
a. reduce total deposits in the banking system. b. reduce excess reserves and the deposit expansion multiplier. c. increase the money supply. d. reduce the amount of reserves required. e. increase total deposits and the deposit expansion multiplier.
Which of the following is an example of a fiscal policy?
a. Raising the discount rate b. Reducing the reserve requirement c. Reducing government spending d. Pegging the currency
Airline pilots make more than bus drivers in part because the training costs of being an airline pilot are higher.
Answer the following statement true (T) or false (F)