Question

Which of the following statements regarding the requirement that a firm be granted a license to operate in a particular market is false?

A. The requirement that they be licensed ensures that the affected firms will be able to earn a positive economic profit. B. One of the economic effects of a license requirement is to constrain the available supply of the affected good or service. C. Advocates of licensing maintain that the practice is necessary to maintain quality of service. D. Relaxing certain licensing requirements should increase the supply of the affected good or service.

Answer 1

A. The requirement that they be licensed ensures that the affected firms will be able to earn a positive economic profit.

Step-by-step explanation:

The requirement that they be licensed ensures that the affected firms will be able to earn a positive economic profit is a statement that should be stated regarding the requirement that a firm be granted a license to operate in a particular market is false, because the statement above mentioned stated a wrong call which is not at all true because as we know that in the short-term, it is probable for economic gains to be positive, negative rather 0 as well. When value is higher than the ordinary entire value, the firm is making a gain.