In a competitive market where firms are earning economic losses, which of the following should be expected as the industry moves to long-run equilibrium, ceteris paribus?
A. A lower price and fewer firms.
B. A lower price and more firms.
C. A higher price and more firms.
D. A higher price and fewer firms.
Answer: D
You might also like to view...
Which of the following would tend to increase AD?
a. a commercial bank using excess reserves to extend a loan to a customer b. a commercial bank purchasing U.S. securities from the Fed as an investment c. an increase in reserve requirements d. an increase in the discount rate
Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?
a. Both item (1) and item (2) are included in the consumption component of GDP. b. Item (1) is included in the consumption component of GDP, while item (2) is included in the investment component of GDP. c. Item (1) is included in the investment component of GDP, while item (2) is included in the consumption component of GDP. d. Only item (2) is included in GDP, and it is included in the investment component.