Table 16-4 This Table Shows the Demand Schedule, Marginal Cost, and Average

question 131

Multiple Choice

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
-Refer to Table 16-4. Which of the following is likely to happen in the long run in this market?

• A)The market is currently in a long-run equilibrium.
• B)The market price is likely to rise.
• C)Firms are likely to enter the market since firms are earning a positive economic profit.
• D)Firms are likely to leave the market since firms are earning a negative economic profit.

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Definitions:

Price Elasticity

An indicator of the sensitivity of the demand for a product to variations in its price.

Elasticity of Demand

A measure of how the quantity demanded of a good or service responds to a change in its price, indicating the sensitivity of consumers to price changes.

Percentage Change

A mathematical calculation that indicates how much a number has increased or decreased in percentage terms relative to its previous value.

Price Elastic

Describes how sensitive demand for a product or service is to changes in its price; high elasticity indicates significant demand change with price fluctuations.