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:

Serious Financial Trouble

A condition where a person, organization, or country faces significant financial challenges that threaten their long-term stability and solvency.

Excessive Response

Refers to a disproportionately intense or extreme reaction to a situation or stimulus.

Seriously Injured

A condition where an individual has sustained severe harm or damage, often resulting in long-term health effects or impairment.

Assault

A threat of violence or injury to a person.