Asked by Braxton Graves on May 07, 2024
Verified
Refer to Figure 15.1. In this industry in the long run,
A) firms will start to incur economic losses.
B) firms will enter until all firms break even economically.
C) product demand will increase so that profits are increased.
D) product supply will decrease so prices will go up.
Economic Losses
Refers to the decrease in monetary value or wealth, usually as a result of business operations or economic activities.
Long Run
A time period in which all factors of production and costs are variable, allowing for all inputs to be adjusted.
- Investigate the influence of firm entry and exit on market consequences over the long run in markets characterized by monopolistic competition.
Verified Answer
RE
Reggie Evans
May 12, 2024
Final Answer :
B
Explanation :
In the long run, firms will enter the industry if there are economic profits to be made, and this entry will continue until economic profits are zero, meaning all firms break even economically. This is a fundamental principle of perfect competition.
Learning Objectives
- Investigate the influence of firm entry and exit on market consequences over the long run in markets characterized by monopolistic competition.