Above-Normal Profits Earned by Existing Firms in a Perfectly Competitive

question 28

Multiple Choice

Above-normal profits earned by existing firms in a perfectly competitive market will eventually lead to:

• A)exit of the firms from the market.
• B)an increase in the market price of the good.
• C)entry of new firms into the market.
• D)a decrease in the aggregate supply.
• E)existing firms emerging as price makers.

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Definitions:

P-Value

Assuming the null hypothesis is applicable, it refers to the chance of recording test results that are at least as notable as the ones actually experienced.

Level Of Significance

The probability of rejecting the null hypothesis when it is actually true, often denoted by alpha (α).

Null Hypothesis

A default hypothesis that there is no significant difference or effect, tested against the alternative hypothesis.