Profits encourage entry into purely competitive industries

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Reference no: EM139302

Q1. Relate opportunity costs to why profits encourage entry into purely competitive industries and explain how losses encourage exit from purely competitive industries?

Q2. Consider the following data on U.S. GDP:

Year Nominal GDP GDP Deflator
( in billions) (BASE YEAR 1996)
2000 9,873 118
1999 9,269 113

a) Illustrate what was the growth rate of nominal GDP between 1999 & 2000(Note: The growth rate is the percentage change from one period to the next.)

b) Illustrate what was the growth rate of the GDP deflator between 1999 & 2000

c) Illustrate what was real GDP in 1999 measured in 1996 prices?

Reference no: EM139302

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