Which of the Following Factors Might Explain Why the Long-Run

question 1

Multiple Choice

Which of the following factors might explain why the long-run equilibrium number of firms can in some instances exceed the socially optimal number?

• A)The appropriability effect (the increase in consumers surplus following entry is not "appropriated" by entrants).
• B)The feedback effect (an increase in the number of firms increases the competitiveness of the market).
• C)The business-stealing effect (entry reduces rival firms' profits,a social loss that entrants do not account for).
• D)The ratchet effect (the more profits the entrants earn,the more the stockholders expect them to earn in the future).

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Definitions:

Diversity-Consensus Dilemma

Refers to the challenge of achieving consensus while valuing and maintaining diversity within a team or organization.

Lessee

An individual or entity that leases an asset or property from another, the lessor.

Article 2(A)

A provision found in the Uniform Commercial Code that governs leases of personal property in the United States.

UCC

The Uniform Commercial Code (UCC) is a comprehensive set of laws that governs all commercial transactions in the United States.