Assume a monopolistically competitive firm comes up with a new innovation that allows it to earn above-normal economic profits
Given the nature of the market in which it operates, over time those profits will be competed away as new competitors enter the market. Indicate whether the statement is true or false
TRUE
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In the real business cycle model, output and employment are
a. determined by real supply-side variables. b. determined by supply and demand factors. c. always at their natural rates. d. both a and c. e. None of the above
What assumption(s) is (are) necessary to generate a kinked demand curve?
a. all firms in the industry ignore the price changes made by any one firm b. any price decrease will be ignored but price increases will be followed c. all firms will follow a price decrease but will ignore any price increase d. all price changes made by any firm will be followed by all of the other firms e. price can increase, but not decrease