What triggers entry in a competitive market? Describe the process that ends further entry
What will be an ideal response?
When firms in a competitive market make an economic profit, the economic profit serves as an inducement to other firms to enter the market. As the other firms enter, the supply increases and the price falls. The fall in the price eventually eliminates the economic profit, at which time entry stops.
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The invisible hand principle indicates that competitive markets can help promote the efficient use of resources
A) if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely. B) even when market participants care only about their own self interests rather than about the overall efficiency of resource use. C) only if buyers and sellers really care, personally, about economic efficiency. D) even if business firms fail to produce goods efficiently.
Based on historical data, which of the following tended to be most unstable over time?
A. the average propensity to save B. real investment spending C. real saving D. real consumption spending