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

question 11

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.Which of the following statements best describes the long-run equilibrium for this firm?

• A)New firms will enter,causing this firm's demand curve to shift to the left until its profits are eliminated.
• B)The firm will continue to earn its existing level of profits.
• C)The firm will continue to earn its existing level of profits because it can prevent the entry of new firms to the market.
• D)Firms with similar cost structures will exit the industry until profits are zero.
• E)The AC curve will shift down in the long run and profits for this particular firm will increase.