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Author Question: Monopolists can make an economic profit in the long-run because of barriers to entry. Indicate ... (Read 122 times)

TVarnum

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on: Jun 29, 2018
Monopolists can make an economic profit in the long-run because of barriers to entry.
 
  Indicate whether the statement is true or false

Question 2

Comment on the following statement: When firms are earning positive profits, the industry supply curve will shift to the right.
 
  What will be an ideal response?


parker125

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Reply #1 on: Jun 29, 2018
Answer to Question 1

TRUE

Answer to Question 2

The statement is true. When firms in perfectly competitive industries are earning positive profit, there is an incentive for firms to expand their scale of operation and for new firms to enter the industry. Thus, the industry supply will rise.


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