When Firms in a Competitive Market Have Different Costs, It

question 63

Multiple Choice

When firms in a competitive market have different costs, it is likely that

• A)free entry and exit in the market will be violated.
• B)the market will no longer be considered competitive.
• C)long-run market supply will be downward sloping.
• D)some firms will earn positive economic profits in the long run.

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Definitions:

Costly Activities

Activities that incur high expenses or require significant resources, often reducing profitability.

New Product

A good, service, or idea that is different from existing options and recently introduced to the market.

Tying

A business practice where a seller requires buyers to purchase a secondary product as a condition of buying a primary product.

Price Regulation

Government-imposed controls on the maximum or minimum allowable prices for certain goods or services, often to protect consumers.