The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 74

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm. FIGURE 11- 3
-Refer to Figure 11- 3. If a decrease in industry demand led to an inward shift of each firm's demand curve, a typical firm would

• A) be making profits and new firms would enter the industry in the long run.
• B) decrease costs in order to break even at PL and QL in the long run.
• C) exit the industry and the industry would shut down.
• D) be making losses and some firms would exit the industry in the long run.
• E) increase costs in order to break even at PL and QL in the long run.

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Definitions:

Liver

A vital organ located in the upper right quadrant of the abdomen, involved in detoxifying substances, producing bile, and metabolizing nutrients.

Visceral Peritoneum

Also known as the serosa, the outermost layer of the abdominal organs that secretes serous fluid to keep the organs from sticking to each other.

Serosa

The outermost layer of the alimentary canal; also known as the visceral peritoneum.

Serous Fluid

A clear, watery fluid secreted by serous membranes, helping to reduce friction between the internal organs.