In a perfectly competitive market, when the price is greater than the minimum average total cost for all firms:
A. positive economic profits are being earned.
B. firms will exit, causing the price to drop.
C. firms will enter, causing the price to increase.
D. None of these is true.
Answer: A
Economics
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If reserves in the banking system increase by $100, then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is
A) 0.01. B) 0.05. C) 0.10. D) 0.20.
Economics
The Federal Reserve issues a report indicating that future inflation will be higher than had previously seemed likely. As a result
A) the supply curve for bonds shifts to the right. B) the demand curve for loanable funds shifts to the left. C) the equilibrium interest rate falls. D) the equilibrium price of bonds rises.
Economics