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

Many governments require companies that produce drugs to obtain government approval before selling a new drug. This is done to _____, and it leads to _____ in the market for the new drug.

In the short run, a firm produces output and earns negative profits if:

Jane is one of 10 chiropractors in her city. Demand for chiropractic services is low enough that all chiropractors in the city are suffering losses. After three chiropractors close their practices, which of the following changes does Jane's practice NOT experience?

(Figure: Monopolistic Competition in the Market for Specialty Watches) Use Figure: Monopolistic Competition in the Market for Specialty Watches. The figure represents a monopolistically competitive firm. In the long run firms will:

In the short run, companies face _____, and in the long run, _____.

When developing laws and regulations, elected government leaders are often biased in favor of the interests of established companies over those of new entrants because:

In the long run, each firm in an industry will:

In the long run, a company can remain profitable only if:

The toothpaste aisle at a large store that sells personal care products contains many versions of toothpaste produced by a small number of sellers. This indicates that toothpaste producers are engaging in _____ to _____.

When sellers in a market earn economic profits:

If a new company enters a product market, what will happen to the existing companies in the market?

What happens to average fixed costs as output rises?

Which of the following is NOT an entry deterrence strategy that a seller would use?

If a seller can create switching costs for its product, then:

Which of the following statements is true?

Creating _____ to _____ is key to a company's ability to earn profits in the long run.

Barriers to entry are one reason that a monopoly:

Total revenue divided by quantity is called _____ or _____.

Why are reputation and customer loyalty important to a company?

(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. Her accounting profit is: