When a perfectly competitive market is in its long-run equilibrium, the fact that the firms make zero economic profit will
A) encourage new firms to enter the market.
B) cause existing firms to shut down.
C) cause existing firms to leave the market.
D) mean that the firms' owners earn a normal return.
D
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If an indifference curve were concave instead of convex to the origin, what implication would that have if the consumer reduces consumption of one good but still wants to enjoy the same level of utility in a two-good world?
What will be an ideal response?
When taxes are levied on transactions, irrespective of the party they are levied on,
a. The government can absorb all the consumer surplus from the transactions as revenue b. The government can absorb all the producer surplus from the transactions as revenue c. The government can absorb some of the surplus, but also creates a social loss since some of the wealth creating transactions are discouraged d. The government can absorb all of the surplus (producer and consumer)