A Perfectly Competitive Firm Is Initially Earning Zero Economic Profit

question 29

Multiple Choice

A perfectly competitive firm is initially earning zero economic profit. Then, a decrease in demand for the firm's product occurs. Of the following, in the long run which action listed below is the firm most likely to take?

• A) Exit the market
• B) Increase its advertising to increase the demand for its product
• C) Increase the quantity it produces
• D) Increase the size of its plant

Analyze the role of the United Nations in shaping the post-World War II order.

Understand the concept of profit-maximizing in labor markets.

Comprehend the characteristics of monopsony in the labor market.

Distinguish between the labor supply curves facing a purely competitive employer and a monopsonist.

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Definitions:

Authorized Shares

The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation.

Stockholders' Equity

The owners' residual interest in the assets of a corporation, after deducting its liabilities.

Date of Record

A specific date set by a corporation on which the shareholders of record are identified as entitled to receive dividends or other distributions.

Stockholders' Equity

The ownership interest of shareholders in the assets of a corporation, calculated as total assets minus liabilities.