Do firms in a perfectly contestable market earn positive economic profit in the long run? Explain
What will be an ideal response?
No, firms in perfectly contestable markets do not earn positive economic profit in the long run. The openness of the market means that firms are pushed to produce efficiently. In the long run, they end up acting like firms in perfect competition with price equal to average total cost.
Economics
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What role does human capital play in accounting for income inequality?
What will be an ideal response?
Economics
A monopoly is inefficient because: a. consumers are forced to pay higher prices for products
b. firms are able to earn economic profits. c. the cost of increased production is less than the value that society places on it. d. price exceeds marginal revenue.
Economics