Recall the Application about the costs involved in opening a restaurant to answer the following question(s).Recall the Application. If you are a franchise owner of a Sonic Drive-In restaurant, and it is in a monopolistically competitive market, you would expect in the long run to earn zero economic profits because:
A. you must compete against other restaurants that are similar to you, but not exactly the same.
B. barriers to entering the restaurant business are relatively low.
C. competition among restaurants is keen.
D. All of these are correct.
Answer: D
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Suppose that the opportunity cost of producing goods differs between two nations. We can correctly state that
A) the two nations should not specialize in the production of goods. B) specialization can lead to a decrease in the production of all goods. C) specialization can lead to an increase in the production of all goods. D) neither country has a comparative advantage in the production of any good.
In the graph above, a government imposed price of $10 represents a price _____ and there is a _____.
A. floor; surplus
B. floor; shortage
C. ceiling; surplus
D. ceiling; shortage