In a Long-Run Equilibrium

question 440

Multiple Choice

In a long-run equilibrium,

• A)excess capacity applies to monopolistically competitive firms but not to competitive firms.
• B)zero economic profit applies to competitive firms but not to monopolistically competitive firms.
• C)markup over marginal cost applies to both monopolistically competitive and competitive firms.
• D)product variety externalities apply to both perfectly competitive firms and monopolistically competitive firms.

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Definitions:

Positive Incentives

Rewards or benefits that motivate individuals to perform certain actions or behaviors.

Negative Incentives

Penalties or undesirable outcomes that are used to discourage certain behaviors or decisions.

Latent Learning

Learning that occurs without any obvious reinforcement at the time but that is apparent in a later situation.

Drive Reduction

A theory in psychology that explains behavior as driven by the need to reduce internal tensions caused by unmet biological needs.