If We Observe Firms Earning Zero Economic Profits in the Short

question 206

Multiple Choice

If we observe firms earning zero economic profits in the short run, we know that

• A) the industry must be perfectly competitive.
• B) the industry must be either perfectly competitive or monopolistically competitive.
• C) there must not be any barriers to entry.
• D) any market structure is possible since firms under any market structure can earn zero profits at some time.

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Definitions:

Customizing Department

A department within a company that is dedicated to modifying or adapting products or services to meet specific customer needs or requirements.

Direct Labor-Hour

A measure of the labor time spent directly on the production of goods or services, often used as a basis for allocating labor costs to products.

Manufacturing Overhead

All manufacturing costs that are not directly associated with the production of a product, including costs for indirect materials, indirect labor, and other indirect expenses.

Casting Department

The Casting Department in a manufacturing setting is where raw materials are poured into molds to form parts or products through the casting process.