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

question 64

Multiple Choice

The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry.
FIGURE 11-4
-Refer to Figure 11-4.Which of the following best describes this industry if all firms have the same cost and revenue curves and are producing output of q0?

• A)firms are earning positive profits and new firms will enter the industry until all firms are operating at their minimum LRAC
• B)all firms are earning positive profits and there is no incentive for firms to enter or exit the industry
• C)firms are earning zero profits and there is no incentive for firms to enter or leave the industry
• D)all firms will try to minimize costs and move toward minimum LRAC
• E)firms are incurring losses and firms will exit this industry

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Definitions:

Point of Difference

A unique feature or benefit that sets a product or service apart from its competitors in the eyes of target customers.

Channel Conflict

A situation where channels for the same product or service compete with each other, potentially reducing profitability for one or all channels involved.

Exclusive Distribution

A distribution strategy where a product is sold exclusively through a specific retailer or distributor.

Distribution Density

The measure of how widely and closely a product or service is made available to potential customers through various retail outlets or distribution channels.