Question 2Mean reversion of profits for competitive industriessuggests thatGroup of answer choicesA. when there are profits, the competition of newfirms will reduce that profit; and when there arelosses, firms going out of business will reduceprofits for businesses that remainB. when there are profits, the competition of newfirms will reduce that profit; and when there arelosses, firms going out of business will increaseprofits for businesses that remainC. profits will tend to increase over timeD. when there are profits, the competition of newfirms will increase that profit; and when there arelosses, firms going out of business will reduceprofits for businesses that remainQuestion 3Mohammad is an accounting major. Upongraduation, he is not sure if he should accept a joboffer in accounting from a bank or a law firm. Hewants to work in whichever industry expected tohave higher profits so he can earn a higherincome. According to the indifference principle,Group of answer choicesA. he should be indifferent between a higherincome and a more secure jobB. accountants will earn the same as otherprofessions because of the mean reversion ofwages and salariesC. accountants will earn the same amount in bothindustries because labor is mobileD. entry of new firms seeking profit, while otherfirms go out of business if experiencing losses willensure that the profitability of both industries willbe the same

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Question 2 Mean reversion of profits for competitive industries suggests that Group of answer choices A. when there are profits, the competition of new firms will reduce that profit; and when there are losses, firms going out of business will reduce profits for businesses that remain B. when there are profits, the competition of new firms will reduce that profit; and when there are losses, firms going out of business will increase profits for businesses that remain C. profits will tend to increase over time D. when there are profits, the competition of new firms will increase that profit; and when there are losses, firms going out of business will reduce profits for businesses that remain

Question 2 Mean reversion of profits for competitive industries suggests that Group of answer choices A. when there are profits, the competition of new firms will reduce that profit; and when there are losses, firms going out of business will reduce profits for businesses that remain B. when there are profits, the competition of new firms will reduce that profit; and when there are losses, firms going out of business will increase profits for businesses that remain C. profits will tend to increase over time D. when there are profits, the competition of new firms will increase that profit; and when there are losses, firms going out of business will reduce profits for businesses that remain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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