A Picture Frame Company Operates in a Monopolistically Competitive Market

question 28

Multiple Choice

A picture frame company operates in a monopolistically competitive market. Its short-run equilibrium price is $80 and its ATC is $65. It sells 100 picture frames a week. From this we can tell:

• A) this firm is making a normal profit.
• B) other picture frame companies will want to exit the market.
• C) there are no other picture frame companies in the area.
• D) economic profits are $1,500.
• E) total profits are being maximized.

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Definitions:

Full-Time Workweek

The standard period of work, often defined as working 35-40 hours or more per week, in a professional setting.

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Occupations that involve manual labor or skilled trades.