"For a perfectly competitive market, an economic profit attracts new firms. But when these firms enter the market, the price falls and the economic profit is eliminated"
Are the previous statements correct or incorrect? What is the long-run profit or loss outcome for firms in a perfectly competitive market?
The statements are correct. As the statements point out, in the long run the economic profit of perfectly competitive firms is eliminated by entry. Similarly, an economic loss will be eliminated by exit. Therefore the long-run equilibrium profit for a perfectly competitive firm is a normal profit.
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Which of the following is true?
a. When the government undertakes an activity, we can be assured that all voters will gain. b. If a government activity is favored by most citizens, it must be productive. c. If most voters oppose a government activity, it must be counterproductive. d. When voters pay in proportion to benefits received, all voters will gain if the government activity is productive.
Logrolling refers to
a. vote trading among legislators. b. the tendency of voters to free-ride on the payment for public goods. c. the power of well-organized interest groups. d. the tendency of legislators to favor the interests of the timber (logging) industry.