Author Question: The main reason(s) firms in a competitive market cannot earn positive profits in the long run ... (Read 32 times)

jc611 · **on:** Jul 1, 2018

The main reason(s) firms in a competitive market cannot earn positive profits in the long run is(are)
a. assets can quickly move in and out of the industry when demand fluctuates
b. an increase in demand leads to entry of firms which absorb the extra demand
c. a decrease in demand leads to exit of firms from the market such that there is no surplus
d. all of the above

Question 2

In a sealed-bid first price auction, if you notice that your competition is stronger, you should
a. Shade your bid more
b. Shade your bid less
c. Bid more aggressively
d. Both B&C