The Ability of Price-Taker Firms to Freely Expand or Contract

question 64

Multiple Choice

The ability of price-taker firms to freely expand or contract their businesses and to enter or exit the market means that

• A) prices will always be high enough to generate positive economic profit.
• B) resources that would be more valuable elsewhere will be trapped, unproductively, in a particular industry.
• C) resource owners cannot move their resources to other areas where they would be more highly valued.
• D) resources that would be more valuable elsewhere will not be trapped, unproductively, in a particular industry.

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