The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run. However, it is possible for a firm to continue to earn economic profits if the firm
A) expands its marketing budget.
B) adopts new technologies that enable it to lower its cost of production.
C) expands its product offerings to appeal to a wider range of consumers.
D) reduces its price to expand its market.
Answer: B
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If a “liberal” wanted to increase aggregate demand, which of the following would he or she tend to favor?
A. An increase in government spending, because it will increase the size of the public sector. B. A decrease in transfer payments, because it keeps the public sector small. C. An increase in transfer payments, because it has a larger multiplier than tax changes. D. A decrease in taxes, because it makes the public sector smaller.
When a government mandate sets the rental price of an apartment below the market clearing level, which of the following result?
A) More apartments are rented. B) Landlords attempt to make up for the lower rental income by charging more for security deposits and cleaning fees. C) Landlords discriminate less. D) Landlords address their tenant's requests in a more prompt manner.
A firm's short-run cost functions depend primarily on the firm's production function and the prices of the inputs to production
Indicate whether the statement is true or false
In the Keynesian model in the long run, an increase in taxes causes the price level to ________ and the real interest rate to ________.
A. rise; fall B. rise; rise C. fall; rise D. fall; fall