If Economic Profits in a Particular Industry Increase, Then We

question 169

Multiple Choice

If economic profits in a particular industry increase, then we would expect

• A) resources to be diverted away from that industry.
• B) firms in that industry to produce less output.
• C) firms to enter that industry, thus expanding it.
• D) consumers to buy less from that industry.

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Definitions:

Average-Total-Cost Curve

A graphical representation showing how the average total cost of producing a good changes as the quantity produced changes.

Average-Fixed-Cost

The fixed costs of production divided by the quantity of output produced; it decreases as production increases.

Average-Variable-Cost

The total variable cost divided by the quantity of output produced.

Marginal Costs

The investment required to manufacture an incremental unit of a product or service.