A perfectly competitive firm cannot earn an economic profit in the long run because
A. there are no barriers to entry into the industry.
B. it faces a perfectly inelastic demand curve.
C. it is a "price-maker."
D. all firms in the industry earn accounting profits.
Answer: A
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An individual pays $100 every month as rent for an apartment, and his monthly opportunity cost of commuting from the apartment to his place of work is $40. Which of the following statements is then true?
A) The direct cost of renting the apartment is $140. B) The indirect cost of renting the apartment is $140. C) The direct cost of renting the apartment is $40, whereas the indirect cost of renting the apartment is $100. D) The direct cost of renting the apartment is $100, whereas the indirect cost of renting the apartment is $40.
If output exceeds its full-employment level, the wage rate will eventually fall, causing a drop in the price level and a drop in real GDP until full employment is restored
a. True b. False