Which of the Following Statements Is True About the Economic

question 302

Multiple Choice

Which of the following statements is true about the economic profits earned by a monopolistic competitor firm in the long run?

• A) Economic profits can be positive since firms have some degree of monopoly power.
• B) Economic profits will be positive since the firm has a downward sloping demand curve.
• C) Economic profits will tend towards zero since positive profits will attract new firms into the industry.
• D) Economic profits can be negative since there is so much competition in the market.

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Definitions:

More Mechanistic

Describing an organization or system that is highly structured and operates in a rigid and controlled manner.

Essential Tension

The necessary pressure or conflict arising from the coexistence of contrasting and sometimes conflicting forces, ideas, or requirements.

Existing Technologies

Currently available tools, machines, devices, or methods employed in the creation, maintenance, or improvement of products or services.

Innovating

Innovating involves introducing new ideas, methods, or products to effect positive change or improvement.