When Existing Firms in a Competitive Market Are Profitable, an Incentive

question 438

Multiple Choice

When existing firms in a competitive market are profitable, an incentive exists for

• A)new firms to seek government subsidies that would allow them to enter the market.
• B)new firms to enter the market, even without government subsidies.
• C)existing firms to raise prices.
• D)existing firms to increase production.

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Definitions:

Pancreas

Internal organ that produces digestive enzymes and the hormones insulin and glucagon.

Simple Goiter

An enlargement of the thyroid gland caused by a lack of iodine, not associated with thyroid dysfunction.

Iodine

A chemical element with the symbol I and atomic number 53, necessary for thyroid function and found in various foods and salts.

Prostaglandins

A group of lipid compounds that have diverse hormone-like effects, such as inducing inflammation, pain, and fever, and regulating reproductive processes.