The Diagram Below Shows Selected Cost and Revenue Curves for a Firm

question 31

Multiple Choice

The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry.
FIGURE 11- 1
-Refer to Figure 11- 1.If this firm is maximizing its profits,does the diagram depict a long- run equilibrium situation?

• A)Yes,because this firm is producing where MC = MR and is earning economic profits.
• B)No,because this firm is suffering losses and firms will exit this market.
• C)Yes,because this firm is producing where MC = MR and is earning zero profits.
• D)No,because this firm is earning profits which will attract new firms to this market.
• E)No,because this firm is a natural monopoly.

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