In the long run, perfectly competitive firms earn zero economic profit. Why do firms enter an industry when they know that in the long-run they will not earn any profit?
What will be an ideal response?
Even though in the long run firms earn zero profit, in the interim period they can earn economic profits. Breaking even in the long run means that a firm earns a return comparable to what it could earn in an alternative use of its resources.
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When the Fed ________ the federal funds rate, other short-term interest rates and the exchange rate also ________. The quantity of money and the supply of loanable funds ________
A) lowers; rise; increase B) lowers; fall; decrease C) lowers; fall; increase D) raises; rise; increase E) raises; fall; increase
Which of the following is a major argument of trade pessimists?
(a) Increased productivity of developed country agriculture. (b) Increased efficiency in industrial use of raw materials. (c) Protectionism against labor-intensive manufactures. (d) All of the above.