Exam 15: Entry, Exit, and Long-Run Profitability

When market leaders produce on a mass scale, new entrants:

How can government regulations that focus on ensuring the health and safety of the public effectively create barriers to entry in markets?

(Scenario: Accounting and Economic Profit) Use Scenario: Accounting and Economic Profit. Scenario: Accounting and Economic Profit Casey recently inherited $100,000 from her grandmother. Rather than invest the money in a mutual fund that earns 5% per year, she quit her job as a translator for the United Nations, which paid $60,000 per year, and started Casey's Coffee Crush, a small café in Tribeca. The location she rented cost $20,000 for the year. The equipment, café furniture, and coffee machines cost another $60,000. Staff, sales help, and advertising cost yet another $40,000. In her first year, her revenue was $150,000. The economic profit of Casey's Coffee Crush is:

When a market has free entry and exit, in the long run, sellers:

A company's profit margin per unit sold equals:

Sellers try to avoid the entry of new rivals through the use of demand-side strategies. These demand-side strategies do NOT include:

Carlos owns one of the 30 lawn mowing businesses in his city. What will happen to his business if there are new entrants into his city's lawn mowing market?

Which of the following strategies would allow a seller to develop unique cost advantages to create a barrier to new sellers entering its market?

Suppose that the market for cab rides in a community is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for cab rides. In the short run, the market price will _____, and the number of rides offered by a typical cab driver will _____.

(Figure: The Cost Curves for Charlie's Cookie Confections) Use Figure: The Cost Curves for Charlie's Cookie Confections. The curve labeled W represents the firm's _____ cost curve.

Gennaro is a blogger living in Italy who could work for la Repubblica (a newspaper in Rome) as a food critic for $50,000 a year but instead runs the blogging business online through advertising, making revenues of $80,000 a year. His only business expenses are $2,000 for supplies and $18,000 in rent for his office space. What is Gennaro's economic profit from working as a freelance writer?

Generally, if you were to hire an accountant to assist you in an economic decision you were considering, the accountant would use only _____ costs in her analysis.

In the small Caribbean nation of Jamaica, large barriers to entry in the sugar industry explain why the two sugar producers in the country:

The Mile End Deli serves traditional delicatessen food in Brooklyn, New York. Which decision is MOST likely to be made over the long run at the deli?

The implicit opportunity cost of capital is:

Malia earns a yearly salary of $130,000 in her job and earns $1,000 per year in interest on her savings. After she quits her job to start a company, she uses all her savings to purchase manufacturing equipment for her company. Given the above information and the data summarizing her first year in business in the table, how much economic profit or loss does Malia earn? { \text { Table } } \\ \begin{array} { | l | l | } \hline \text { Total revenue } & \text { Bills paid } \\ \hline \$ 350,000 & \$ 200,000 \\ \hline \end{array}

When sellers exit a market in which the average seller has losses, the remaining sellers will each experience: