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).

---

Definitions:

Independent Events

Two or more events that have no influence on each other's outcomes.

Short Words

Brief and concise words, often used to enhance clarity and comprehension in communication.

Brooklyn Dodgers

A historic Major League Baseball team known for breaking the color barrier when they signed Jackie Robinson in 1947.

Playing Field

An area marked and prepared for sports or games, or metaphorically, a space or sphere where activities and competition occur.