Refer to the Information Provided in Figure 15

question 163

Multiple Choice

Refer to the information provided in Figure 15.5 below to answer the question(s) that follow. Figure 15.5
-Refer to Figure 15.5. In the long run in this monopolistically competitive industry,

• A) firms will leave the industry until each firm earns an economic profit.
• B) some firms will leave the industry until the remaining firms earn a normal profit.
• C) firms will enter the industry, which will increase the demand for the product.
• D) the government will subsidize the firms to eliminate any losses the firms incur.

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Definitions:

Gain on Sale

The profit recognized when an asset is sold for more than its carrying amount.

Other Revenue

Income that a business earns from activities not related to its primary operations, such as investment income or rental income.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be consumed or converted into cash in the short term, such as property, plant, and equipment.

Current Assets

Items expected to be cashed in, liquidated, or expended within 12 months or throughout the duration of the business cycle, whichever period is greater.