In the Long Run, What Level of Economic Profits Can

question 95

Multiple Choice

In the long run, what level of economic profits can a monopolistic competitor expect to receive?

• A) positive
• B) zero
• C) negative
• D) either negative or positive, depending on the demand for its product and its costs

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Definitions:

Resource Markets

Markets where productive inputs like labor, raw material, and capital are bought and sold.

Marginal Productivity Theory

A principle stating that the wage paid to a factor of production, such as labor, will equal the additional output or marginal product that the factor produces.

Marginal Productivity Theory

An economic theory that suggests the value of a good or service is determined by the productive resources involved in its production, emphasizing the contribution of each unit of labor or capital.

Income Distribution

Refers to the way in which total income is shared among the members of a society.