The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 26

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm.
FIGURE 11- 3
-Refer to Figure 11- 3.If an increase in industry demand led to an outward shift in each firm's demand curve,and no change to the firm's costs,the typical firm would

• A)be making profits and new firms would enter the industry in the long run.
• B)be making losses and some firms would exit the industry in the long run.
• C)decrease costs in order to break even at P1 and Q1 in the long run.
• D)increase costs in order to break even at P1 and Q1 in the long run.
• E)would expand its output in the long run.

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