When the Existing Firms in a Monopolistically Competitive Industry Earn

question 104

Multiple Choice

When the existing firms in a monopolistically competitive industry earn above-normal profit:

• A)new firms enter the market,and entry continues until firms earn normal profit.
• B)new firms have no incentive to enter the market.
• C)new firms have an incentive to enter the market but are legally barred from doing so.
• D)they increase their production and lower the price level.
• E)their cost structure automatically changes,eliminating the additional profit.

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Definitions:

Assets GM and GE

Refers to the tangible and intangible items owned by General Motors (GM) and General Electric (GE) that are used in their operations to generate revenue.

Beta

A measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole.

Evolution

The gradual development of something, often used in the context of the biological process by which organisms change over generations.

Forecast

The process of making predictions about future events or trends based on current or historical data.