The Free Entry and Exit of Firms in a Monopolistically

question 640

Multiple Choice

The free entry and exit of firms in a monopolistically competitive market guarantees that

• A)both economic profits and economic losses can persist in the long run.
• B)both economic profits and economic losses disappear in the long run.
• C)economic profits, but not economic losses, can persist in the long run.
• D)economic losses, but not economic profits, can persist in the long run.

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Definitions:

Income

The monetary payment received for goods or services, or from other sources, like investments, over a certain period of time.

Expenses

Costs incurred in the process of earning revenue, including operational costs, overheads, and costs of goods sold.

Equivalent Variation

A measure in economics that represents the amount of money a consumer would need to reach their original utility after a price change.

Tax Imposed

A financial charge or levy mandated by a government on individuals or entities.