When New Firms Enter a Competitive Price-Taker Market

question 81

Multiple Choice

When new firms enter a competitive price-taker market,

• A) economic profits of existing firms will continue to be zero.
• B) entering firms will earn zero economic profit upon entry into the market.
• C) existing firms may see their costs rise as more firms compete for limited resources.
• D) prices will rise as existing firms raise prices to keep new firms out of the market.

---

Definitions:

Coefficient

A coefficient is a numerical or constant quantity placed before and multiplying the variable in an algebraic expression.

Binomial Expansion

The process of expanding an expression raised to a power into a series using binomial theorem.

Coefficient

A numerical or constant quantity placed before and multiplying the variable in an algebraic expression.

Binomial Expansion

The process of expanding an expression that is raised to a finite power and expressed as a sum of terms using the binomial theorem.