Which of the Following Statements Is Least True with Regards

question 5

Multiple Choice

Which of the following statements is least true with regards to Dennis Mueller's study of profit persistence?

• A)Mueller's results suggest that firms with abnormally high levels of profitability tend, on average, to decrease in profitability over time.
• B)The profit rates of firms with abnormally high levels of profitability and firms with abnormally low levels of profitability will always converge to a common mean as the theory of perfect competition predicts
• C)Mueller's results suggest that firms with abnormally low levels of profitability tend, on average, to experiences increases in profitability over time
• D)Firms that start out with high profits converge, in the long run, to rates of profitability that are higher than the rates of profitability of firms that start out with low profits
• E)Mueller's work implies that market forces are a threat to profits, but only up to a point

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Definitions:

Excise Taxes

A tax levied on specific goods or commodities produced or sold within a country, such as alcohol, cigarettes, and gasoline.

Government Intervention

Actions taken by a government to influence or regulate various activities within its economy, such as imposing taxes, subsidies, and regulations.

External Costs

Costs incurred by society as a whole due to economic activities but not reflected in the market price or borne by the producer or consumer involved.

Pollution Abatement

Actions or measures taken to reduce, control, or eliminate pollution and its negative impacts on the environment.