If Short-Run Economic Profits Are Greater Than Zero for Firms

question 176

Multiple Choice

If short-run economic profits are greater than zero for firms in a monopolistically competitive market, in the long run we expect

• A) entry barriers to prevent competing firms from entering this market.
• B) the demand curve for firms in the market to shift to the right.
• C) the average cost of production to decrease.
• D) the average cost of production to increase.

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Definitions:

Days

Units of time equivalent to 24 hours, representing the approximate period it takes for the Earth to complete one rotation on its axis.

Grow

To increase in size, amount, or intensity over time.

Invest

To allocate resources, typically money, with the expectation of achieving a future benefit or return.

Total

The sum of values or items added together, representing the overall amount or quantity.