When Firms Already in a Competitive Market Are Profitable, an Incentive

question 178

Multiple Choice

When firms already in a competitive market are profitable, an incentive exists for:

• A)existing firms to increase production
• B)new firms to seek government subsidies that would allow them to enter the market
• C)existing firms to raise prices
• D)new firms to enter the market

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Definitions:

Imports

Goods or services brought into one country from another for sale, which can affect a nation's economy in various ways.

Exports

Products or services shipped from one country to another for the purpose of sale or exchange.

Arbitragers

Individuals or entities that attempt to profit from differences in prices across markets by simultaneously buying and selling similar or identical assets.

Pakistani Rupees

The official currency of Pakistan, used as a medium of financial transaction within the country.