If a Monopoly Firm Is Continually Earning Above-Normal Profits,then

question 7

Multiple Choice

If a monopoly firm is continually earning above-normal profits,then

• A)the entry of new firms will reduce profits to normal in the long run
• B)the profits may remain above-normal in the long run despite the entry of new firms
• C)market forces other than the entry of new firms will reduce profits to normal in the long run
• D)falling market demand due to the firm's high prices will reduce profits to normal in the long run
• E)barriers to entry may enable the profits to remain above-normal in the long run

Understand the significance of diversity in funding sources and its impact.

Grasp the concepts of convertible debt and its implications for entrepreneurial control.

Acknowledge the influence of founders' backgrounds on funding opportunities.

Acquire knowledge on the exit strategies available to entrepreneurs and investors.

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Definitions:

Federal Reserve District Banks

The 12 regional banks in the Federal Reserve System which oversee and regulate banking institutions within specific geographic areas of the US.

Discount Rate

The interest rate charged by central banks on loans to commercial banks or the rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Excess Reserves

The amounts of cash banks hold in their vaults or deposit at the central bank which exceed the regulatory requirements.

Money Supply

The entire financial capacity of an economy, taking into account cash, coins, and the amounts in both checking and savings accounts, at a specific point in time.