In a perfectly contestable market in the long run, each firm
A. produces at the minimum point on its long-run average total cost curve.
B. earns a profit below its opportunity cost of capital.
C. avoids making capital expenditures.
D. All of the responses are correct.
Answer: A
Economics
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In the long run, total fixed cost will:
a. remain constant. b. increase. c. decrease. d. not exist by definition.
Economics
The current worth of future income after it is discounted, to reflect the fact that future dollars are worth less than current dollars, is called
a. the net present value of the income. b. arbitrage. c. the inflationary premium. d. the real interest rate.
Economics