If Competitive Industry Z Is Making Substantial Economic Profit, Output

question 28

Multiple Choice

If competitive industry Z is making substantial economic profit, output will

• A) fall in industry Z and firms will likely leave the market.
• B) fall in all industries except industry Z.
• C) expand in industry Z, as more resources will move to that industry.
• D) expand in industry Z, but no new firms will enter the market.

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Definitions:

Attributions

The process by which individuals explain the causes of behavior and events, either their own or others'.

Heuristics

A strategy for making judgments quickly, at the price of occasional mistakes.

Dissonance Theory

A psychological theory suggesting that inconsistency among beliefs, attitudes, and behaviors causes discomfort, leading individuals to seek coherence.

Floodplain

A flat area of land adjacent to a river or stream that experiences occasional or periodic flooding.