The monopolistically competitive firm's economic profits tend toward zero in the long run. Why is this so?
A) Monopolistically competitive firm's are rarely able to maintain the corporate discipline necessary to sustain profits in the long run.
B) If a monopolistically competitive firm is profitable for more than 2 years, the Justice Department orders a corporate restructuring to pull the company back to a normal rate of return.
C) In the long run, other firms will successfully offer substitutes for the profitable firm's product, and competition will eliminate economic profits.
D) Even though the monopolistically competitive firm can successfully maintain barriers to entry, keeping competition at bay becomes very expensive.
Answer: C
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The creation of a lender of last resort in the United States
A) occurred in response to banking panics. B) was mandated in the U.S. Constitution. C) occurred in response to the S&L crisis of the 1980s. D) has been recommended by the Treasury in its report of late 1992.
Federal taxes increased in 1932, 1935 and 1937, and Social Security taxes were imposed in 1937 . Which group is credited for these tax increases during the Great Depression?
(a) Classical economists (b) Keynesian economists (c) Monetarists (d) Government officials and special interest groups