Firms in perfect competition will leave the industry if they
a. suffer short-run losses
b. suffer losses, even if they are covering variable costs in the short run
c. suffer long-run losses
d. earn a normal profit
e. earn a zero economic profit
C
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If firms in competitive price-searcher markets are earning economic losses, what effect will the exit of existing firms have?
a. Demand for the product of each firm will be reduced until the losses are eliminated. b. Demand for the product of each firm will increase until all firms earn zero profit. c. Demand for the product of each firm will increase until price is greater than average total cost. d. Demand for the product of each firm will fall until price equals marginal cost.
In the area of agricultural chemicals, the Environmental Protection Agency requires detailed labeling on cans of pesticides and herbicides. Generally speaking, the industry not only doesn't oppose these labeling requirements, but even supports government-sponsored education programs on how to use these chemicals. Why?
What will be an ideal response?