In the Long Run, Each Firm in a Competitive Industry

question 7

Multiple Choice

In the long run, each firm in a competitive industry earns

• A)zero accounting profits.
• B)zero economic profits.
• C)positive economic profits.
• D)Both a and b are correct.

---

Definitions:

Discriminatory Payments

Payments or compensation practices that favor certain groups over others, often based on illegal or unethical criteria.

Robinson-Patman Act

A federal law intended to prevent price discrimination in sales to those who compete with each other, designed to protect small businesses from larger, more powerful companies.

McCarran-Ferguson Act

U.S. federal law enacted in 1945 that allows states to regulate the insurance industry, primarily declaring that state insurance laws supersede most federal regulations.

Antitrust Liability

Legal responsibility incurred due to violating antitrust laws, which aim to promote competition and protect consumers from monopolistic practices.