Asked by Christin Evans on Jun 12, 2024
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Economic profits in the rent-a-wreck industry are $400,000 per firm.Assuming that the industry is perfectly competitive,
A) new firms will enter and the supply of the car rentals will increase.
B) new firms will enter but there will be no effect on the supply of car rentals.
C) firms will leave the industry and supply will fall.
D) the industry is in equilibrium.
Rent-a-Wreck Industry
The business sector that specializes in renting out older, often pre-owned vehicles at reduced rates compared to standard rental services.
Economic Profits
The difference between total revenues and total costs, including both explicit and implicit costs.
Perfectly Competitive
A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, which leads to firms being price takers.
- Discern the influences responsible for the onset and conclusion of participation in perfectly competitive market environments.
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Learning Objectives
- Discern the influences responsible for the onset and conclusion of participation in perfectly competitive market environments.
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