The Entry and Exit of Firms in a Monopolistically Competitive

question 196

Multiple Choice

The entry and exit of firms in a monopolistically competitive market guarantee that

• A)marginal revenue equals marginal cost and average total cost is minimized.
• B)firms can earn economic profits in the long run.
• C)price equals average total cost in the long run.
• D)firms can earn economic profits in the short run.

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Definitions:

Evaluate Company

Evaluating a company involves analyzing its financial statements, operations, market position, and future prospects to determine its value and health.

Business Entity

An organization that exists as a separate and distinct legal unit, capable of conducting business, entering into agreements, and owning property.

Operating Cycle

The average time period it takes for a business to convert its inventory into cash through sales.

Business Entity

An organization that engages in economic activities, recognized as a separate legal entity from its owners.