For the past three years, you have earned economic profits of $5,00 . per year by being the only vendor selling bottled tap water at your town's Fourth of July celebration. When you go to city hall to apply for a vending permit for this year's
celebration, the city clerk mentions that fifty new firms have received permits to sell tap water this year. a . What can you do to protect your economic profit in the short run? b. What can you do to protect your economic profit in the long run?
a . You may be able to protect your profit in the short run by differentiating your bottled tap water from
your competitors' tap water.
b. There is nothing you can do to protect your economic profit in the long run, because other firms, with
product differentiation of their own, will enter the market until economic profit falls to zero.
You might also like to view...
Suppose that a company produces at a point where its MR is $430 and its MC is $105, this implies that
a. the firm earns a total profit of $325 at that output level b. the firm’s total costs are rising faster than its total revenue c. the firm’s total profit is rising, suggesting that the firm should expand production d. each unit of output generates an average profit of $325
Refer to Figure 16-12. An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD1 to AD2
Assuming a constant price level, the difference in real GDP between point A and point B will be ________ $200 billion. A) less than B) greater than C) equal to D) There is insufficient information given here to draw a conclusion.
The expected value is
A) the total of all possible outcomes. B) the arithmetic average of all possible outcomes. C) the average of all possible outcomes weighted by their respective probabilities. D) the total of all possible outcomes divided by the number of different possible outcomes.
In the above table, marginal utility begins to diminish after consumption of the
A. second slice of pizza. B. fourth slice of pizza. C. fifth slice of pizza. D. third slice of pizza.