When Firms Earn Above Normal Rates of Return

question 361

Multiple Choice

When firms earn above normal rates of return

• A) they are able to raise their prices to increase their profits.
• B) they are earning positive profits and new firms are likely to enter the industry.
• C) they tend to leave the industry and seek profits elsewhere.
• D) they are still breaking even economically.

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Definitions:

Nervous Tissue

A class of tissue comprised of neurons and supporting cells that specializes in communication throughout the body.

Vasopressin

A hormone released by the pituitary gland that regulates the body's retention of water and constricts blood vessels.

Antidiuretic Hormone

A hormone released by the pituitary gland that signals the kidneys to increase water reabsorption in the blood, thereby controlling the water balance in the body.

Potassium Secretion

The process by which cells actively transport potassium ions out of the cell or into the extracellular fluid or lumen of an organ.