Industries in Which Firms Are Enjoying Positive Profits Are Likely

question 222

Multiple Choice

Industries in which firms are enjoying positive profits are likely to ________ in the long run.

• A) expand
• B) contract
• C) neither expand nor contract, as firms must earn an economic profit to stay in business
• D) expand or contract depending on the normal rate of return

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Definitions:

Causality

The relation between a cause and its effect, often established through a combination of observational studies and experiments.

Three Variables

Refers to any analytic scenario, model, or experiment that involves exactly three different variables affecting outcomes.

Compounding Periods

Compounding Periods refer to the frequency with which interest is added to the principal balance of an investment or loan, affecting the total interest earned or paid.

Compound Interest

Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods, leading to exponential growth.