Which of These Types of Firms Can Earn a Positive

question 608

Multiple Choice

Which of these types of firms can earn a positive economic profit in the long run?

• A)monopolies, but not competitive firms or monopolistically competitive firms
• B)monopolies and monopolistically competitive firms, but not competitive firms
• C)monopolies, monopolistically competitive firms, and competitive firms
• D)No firms earn positive economic profit in the long run. Entry will reduce all firms' economic profit to zero in the long run.

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Definitions:

Well-Diversified Portfolios

Investment portfolios that are spread across various assets to minimize exposure to any single asset or risk.

Arbitrage Opportunities

Situations in which it is possible to simultaneously buy and sell an asset or assets to profit from a difference in prices across different markets or formats without risk.

Expected Excess Return

The return on an investment over the risk-free rate of return that is anticipated based on risk assessment.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates more volatility than the market.