Above-Normal Profits Earned by Existing Firms in a Perfectly Competitive

question 28

Multiple Choice

Above-normal profits earned by existing firms in a perfectly competitive market will eventually lead to:

• A)exit of the firms from the market.
• B)an increase in the market price of the good.
• C)entry of new firms into the market.
• D)a decrease in the aggregate supply.
• E)existing firms emerging as price makers.

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Definitions:

Reinforcement

A process in behaviorism that increases the likelihood of a behavior repeating by applying a stimulus following that behavior.

DRL Schedule

A type of reinforcement schedule where a response is only reinforced if it occurs after a specified amount of time has passed since the last reinforced response.

Reinforcement

In behaviorism, a stimulus or event that follows a behavior and increases the likelihood of that behavior's recurrence.

Variable-ratio

A schedule of reinforcement where a response is reinforced after an unpredictable number of responses, making it highly resistant to extinction.