Suppose when a market has four firms, average economic profit is $1,000 per month. When the market has five firms, the average economic profit is -$50 per month. This suggests that
A) the long-run equilibrium number of firms is between four and five.
B) the long-run equilibrium number of firms is four.
C) the long-run equilibrium number of firms is five.
D) there is no long-run equilibrium in this market as profits can never be zero.
A
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To find the cost of the CPI market basket in the current period we have to multiply the
A) quantities in the CPI market basket by the base period prices. B) quantities in the CPI market basket by the current period prices. C) current period quantities in the CPI market basket by the base period prices. D) current period quantities in the CPI market basket by the current period prices. E) quantities in the CPI market basket by the base period prices and then multiply by 100.
Monopoly firms manage to earn positive profits, even in the long run because
a. they have no close substitutes b. there are high barriers of entry to the market c. they have a cost advantage difficult to duplicate d. all of the above