In Perfectly Competitive Markets, an Implication of Entry and Exit

question 128

Multiple Choice

In perfectly competitive markets, an implication of entry and exit in response to economic profit and loss is that:

• A)firms must earn positive economic profit in the long run.
• B)firms will produce the quantity that minimizes average variable costs in the short run.
• C)firms will produce the quantity that minimizes average total costs in the long run.
• D)market demand is completely elastic.

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Definitions:

Two-factor Theory

A concept in psychology that suggests job satisfaction and dissatisfaction are influenced by separate and distinct factors, with hygiene factors affecting dissatisfaction and motivators affecting satisfaction.

Cognitive Label

The process of identifying and defining one's emotional state based on cognitive assessment of the situation.

Sympathetic Division

A part of the autonomic nervous system responsible for the body's 'fight or flight' response to stress.

Parasympathetic Division

A branch of the autonomic nervous system responsible for stimulating rest and digest activities in the body.