The market for bananas is perfectly competitive. Firms in the arket are producing output and each firm is receiving positive economic profits. Which of the following is true? (i) new firms enter the industry, increasing supply, driving profits down to zero. (ii) firms will exit the industry, increasing supply, driving profits down to zero. (iii) firms will exit the industry, decreasing supply, driving profits down to zero. (iv) new firms enter the industry, decreasing supply, driving profits down to zero.

The market for bananas is perfectly competitive. Firms in the arket are producing output and each firm is receiving positive economic profits. Which of the following is true? (i) new firms enter the industry, increasing supply, driving profits down to zero. (ii) firms will exit the industry, increasing supply, driving profits down to zero. (iii) firms will exit the industry, decreasing supply, driving profits down to zero. (iv) new firms enter the industry, decreasing supply, driving profits down to zero.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 10MC

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