If the Typical Firm in a Perfectly Competitive Market Is

question 100

Multiple Choice

If the typical firm in a perfectly competitive market is earning positive economic profits then which of the following would be expected to happen?

• A)Firms will exit the market.
• B)New firms will enter the market.
• C)There will be neither entry nor exit in this market.
• D)There will soon be a depression in the market.

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Definitions:

Graph

A visual representation of data, which showcases the relationship between two or more variables through lines, bars, or other symbols.

Difference

The result of subtracting one value from another, often used in various contexts like mathematics, statistics, and economics.

X-Inefficiency

The difference between efficient behavior of businesses in a competitive market and their actual behavior due to a lack of competitive pressure.

Pure Competition

A market structure characterized by an unlimited number of small sellers, identical products, and free entry and exit, leading to perfect competition.