In the Long Run Perfectly Competitive

question 37

Multiple Choice

In the long run perfectly competitive

• A)firms will accept losses if there is the hope of someday turning a profit.
• B)firms will not accept anything less than a profit rate greater than the going interest rate.
• C)firms will accept zero economic profits.
• D)firms must have revenues greater than explicit and implicit costs.

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Definitions:

Endowment Effect

A mental occurrence in which individuals attribute increased worth to objects simply because they possess them.

Losses

Negative financial results stemming from expenses exceeding revenues or from decreases in asset values.

Gains

The benefits or profits gained from a particular activity or financial transaction.

Status-Quo Bias

Status-quo bias is the preference to keep things the same or maintain a current or previous decision.