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In the long run in a purely competitive industry entry and exit of firms can occur. True Or False?
True
What market characteristics suggests that purely competitive firms have only weak incentives to innovate?
Economies of scale
What happens when a purely competitive firms producing cashew discover that P exceeds MC?
Combined output is too little to achieve allocative efficiency. In the long run, supply will increase as firms enter to capture economic profits being earned. Supply increase will reduce the price of cashews.
What is a purely competitive industry?
Firms are price takers, price is equal to marginal costs, demand is perfectly elastic, i.e. constant and horizontal, the firms makes zero economics profits.
Why a firm in a purely competitive labor market a wage taker?
This is due to the fact that their are other firms competing to get that same labour, therefore making them a wage taker.
In the long run in a purely competitive industry entry and exit of firms can occur. True Or False?
True
What market characteristics suggests that purely competitive firms have only weak incentives to innovate?
Economies of scale
What happens when a purely competitive firms producing cashew discover that P exceeds MC?
Combined output is too little to achieve allocative efficiency. In the long run, supply will increase as firms enter to capture economic profits being earned. Supply increase will reduce the price of cashews.
What is a purely competitive industry?
Firms are price takers, price is equal to marginal costs, demand is perfectly elastic, i.e. constant and horizontal, the firms makes zero economics profits.
Why a firm in a purely competitive labor market a wage taker?
This is due to the fact that their are other firms competing to get that same labour, therefore making them a wage taker.
What are US firms at the forefront of in economic markets?
US firms are at the forefront of technological advances.
What is one economic principle?
an economic princple is a widely accepted behaviour of individuals and firms
What are 2 examples of microeconomics?
The economic behavior of households and firms.
Why firms do not want to expand internatiOnally?
economic and political risks
The study of the economic behavior of individuals and firms is called?
Meaningful statement about the economic behavior or the economy is called?
Can poverty cause poverty?
Purely in Economic context, yes, poverty can set off a vicious circle, culminating in even more poverty. It goes something like this : Poverty > Less Income > Less Consumption > Low Consumption Expenditure > Low Revenue for firms > Lesser Production > Lesser Income for Factor Inputs > Poverty Therefore, this vicious circle will keep on incrementing. This can be prevented by suitable injections of capital investment by governments to increase availability of credit in the economy.
What is the definition of expanding industry?
An industry whose firms earn economic profits and for which an increase in output occurs as new firms enter the industry.
