If the Typical Firm in a Perfectly Competitive Market Is

question 169

Multiple Choice

If the typical firm in a perfectly competitive market is currently earning a 5% economic profit,what will happen in this market in the long run?

• A)new firms will enter until the economic profits have disappeared.
• B)firms will exit until the economic profit reaches 10%.
• C)firms will neither enter nor exit,since 5% economic profit is enough to maintain the existing number of firms in the market.
• D)It depends on the rate of normal profit in this market.

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Definitions:

Carboxyl Group

A functional group, written as -COOH, present in organic acids comprising a carbon atom double-bonded to an oxygen atom and singly bonded to a hydroxyl group.

Hydroxyl Group

A functional group (-OH) consisting of an oxygen atom bonded to a hydrogen atom, found in alcohols and phenols.

Sodium Propanoate

A sodium salt of propanoic acid, used as a food preservative with the formula CH3CH2COONa.

Hydrobromic Acid

A strong acid consisting of hydrogen bromide in water, used in the synthesis of bromine compounds.