A monopolistically competitive industry that earns economic profits in the short run will
A) experience a rise in demand in the long run.
B) experience the entry of new rival firms into the industry in the long run.
C) experience the exit of existing firms out of the industry in the long run.
D) continue to earn economic profits in the long run.
B
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On a graph we draw a consumer's budget constraint, measuring the number of apples on the horizontal axis and the number of light bulbs on the vertical axis. If the slope of the budget constraint is -2, then
a. an apple costs twice as much as a light bulb. b. the opportunity cost of a light bulb is 2 apples. c. the opportunity cost of an apple is one-half of a light bulb. d. All of the above are correct.
Which term is synonymous with a perfectly competitive firm?
a. Price taker b. Oligopoly c. Private enterprise d. Monopoly