Asked by
ReAsia Elexis
on Dec 12, 2024
Verified
Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?
A) There is always more than one firm in competitive price-searcher and competitive price-taker markets.
B) Both competitive price-searcher and competitive price-taker markets are characterized by firms producing identical goods, but a monopoly is not.
C) In both competitive price-searcher and competitive price-taker markets, the barriers to entry are low; this is not true under a monopoly.
D) A monopoly firm has a downward-sloping demand curve; firms in the other types of markets do not.
Price-Searcher Markets
Markets where sellers have some discretion over the price of their products due to a lack of perfect competition.
Price-Taker Markets
Markets where individual firms have no control over the price of their products, due to perfect competition and homogeneous products.
Economic Profits
The difference between a firm's total revenue and all costs, including both explicit and implicit costs, representing the excess over the opportunity cost.
- Understand the concept of economic profits and losses in different market structures.
- Identify the role of barriers to entry in maintaining a firm's market power.
Verified Answer
YV
Learning Objectives
- Understand the concept of economic profits and losses in different market structures.
- Identify the role of barriers to entry in maintaining a firm's market power.