In a market setting, if the demand for digital video recorders increases, we can
ID: 1206243 • Letter: I
Question
In a market setting, if the demand for digital video recorders increases, we can expect that there will eventually be a reduction in the price of digital video recorders. A reduction in the quantity of digital video recorders supplied by producers. more digital video recorders produced. a shortage of digital video recorders. In the figure below, the monopolist's profit-maximizing price is A B C D When firms in a completive industry with low barriers to entry are earning positive economic profits new firms will enter the industry and the market price will fall until firms are earning only a normal rate of return. firms will exit the industry and market price will rise until firms are earning only a normal rate of return. firms will neither enter nor exit the industry. none of the above Adam Smith's invisible hand principle' stresses that benevolence is the primary motivator that encourages individuals to engage in productive activity. the tendency of the decentralized competitive market process to direct self-interested individuals toward activities that enhance the overall economic welfare of society. the potential of central planning and dictatorship as a means if bringing the self-interest of individuals into harmony with the overall economic welfare of society. the tendency of self-interested individuals to pursue activities that only benefit themselves and harm the overall economic welfare of society.Explanation / Answer
When demand for video recorders increases, eventually supply will also increase to meet the excess demand.
2. a) A
Profit maximization occurs when MR equals MC and Price is determined from Demand curve.
(Image is not visible properly)
3. a) New firms will enter the industry and the market price will fall until all firms are earning normal rate of returns.
In perfect competition, there are no barriers for firms to enter the industry. When firms earn super normal profits, new firms enter therby reducing prices and hence profits.
4. b
Adam's invisible hand principle means that market corrects itself automatically through demand and supply changes.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.