The Entry and Exit of Firms in a Monopolistically Competitive

question 48

Multiple Choice

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

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

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Definitions:

Fair Value

The price that would be received for selling an asset or paying off a liability, often the market price for an equity or debt security.

Interest-bearing Note

A debt instrument that requires the issuer to pay the lender interest over the life of the note, in addition to repaying the principal amount at maturity.

Maturity Value

The total amount due to the owner of an investment at the end of its term, including principal and interest.

Notes Receivable

A claim against a debtor for an uncollected amount, typically evidenced by a formal instrument of credit.