When a Firm in a Competitive Market Is Earning Profits

question 67

Multiple Choice

When a firm in a competitive market is earning profits, this indicates that the firm is

• A) exploiting consumers.
• B) increasing the value of resources.
• C) blocking the entry of competing firms.
• D) reducing overall wealth in the market.

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Definitions:

Oligopoly Model

An economic model that describes a market structure in which a few firms dominate the industry and have the ability to influence prices and market outcomes.

Competitive Market

A market structure in which many firms offer products or services that are similar, leading to high levels of competition.

Remarkable Healing

Significant or extraordinary recovery from illness or injury.

Cournot Duopolists

Firms in a duopoly market structure where each firm chooses its output level assuming the other does not change its output, leading to a strategic interdependence in decision-making.