When Entry and Exit Behavior of Firms in an Industry

question 179

Multiple Choice

When entry and exit behavior of firms in an industry does not affect a firm's cost structure,

• A) the long-run market supply curve must be horizontal.
• B) the long-run market supply curve must be upward-sloping.
• C) the long-run market supply curve must be downward-sloping.
• D) we can't tell anything about the shape of the long-run market supply curve.

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Definitions:

Central Bank

An institution that manages a country's currency, money supply, and interest rates, oversee the commercial banking system, and provides financial services to the government.

Unemployment Rate

The percentage of the labor force that is jobless and seeking employment, used as an indicator of the economy's health.

Contractionary Monetary Policy

Monetary policy measures undertaken by a central bank to reduce inflation and slow down economic growth by decreasing the money supply or increasing interest rates.

Minimum Wage

The lowest remuneration that employers can legally pay their workers, a rate which is set by government legislation.