Refer to the Accompanying Graphs for a Competitive Market in the Short

question 173

Multiple Choice

Refer to the accompanying graphs for a competitive market in the short run. What will happen to the representative firm's economic profits as long-run market adjustments occur?

• A)Profits will increase to some positive value.
• B)Profits will decrease to some negative value.
• C)Profits will increase to zero.
• D)Profits will stay the same as they are now.

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Definitions:

Regression Line

A straight line that best represents the data on a scatter plot, showing the relationship between the independent and dependent variables.

Residuals

The differences between observed values and the values predicted by a model.

Confidence Interval

An aggregate of values, concluded from statistical review of samples, assumed to likely house the unknowable value of a population parameter.

Prediction Interval

A range of values that is likely to include the value of an unknown parameter for a future observation with a specified probability.