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

question 47

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

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