Mr. Stewart owns the only hardware store in a small Midwestern town. His nearest competition is more than 50 miles away, yet he does not earn any economic profit. Does someone need to explain the economic concept of monopoly to him?
Most likely, Mr. Stewart is aware of the potential for competition. Entry into the hardware market would be relatively inexpensive for a potential competitor. Economic profit would make entry into this market attractive. Because of this, he has an incentive to price competitively.
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In 2011, the poverty rate in the United States was
a. 5.9 percent. b. 11.1 percent. c. 15.0 percent. d. 22.4 percent.
If goods X and Y are substitute goods, then an increase in the price of Y, other things being equal,
A) results in a decrease in the amounts of both X and Y consumed. B) decreases the quantity demanded of Y, but has no effect on the amount of X consumed. C) results in a decrease in the quantity of Y consumed, but increases the demand for X. D) has no real effect on the quantity demanded of good Y, but increases the demand for X.