The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 108

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm.
FIGURE 11-3
-Refer to Figure 11-3.If a decrease in industry demand led to an inward shift of each firmʹs demand curve,a 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)exit the industry and the industry would shut down.
• D)increase costs in order to break even at PL and QL in the long run.
• E)decrease costs in order to break even at PL and QL in the long run.

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