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.

---

Definitions:

Cost of Capital

The rate of return that a company must earn on its investments to maintain its market value and satisfy its investors and creditors.

Foreign Project

A business venture or investment located outside the investor's domestic country, often subject to additional risks such as currency fluctuations and political instability.

Domestic Project

A project undertaken within a country's borders, focusing on local development or business activities.

Interest Rate Parity

A theory suggesting that the difference in interest rates between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.