Figure 8.3 -Figure 8.3 Shows Demands and Costs for a Monopolistically Competitive

question 281

Multiple Choice

Figure 8.3
-Figure 8.3 shows demands and costs for a monopolistically competitive firm. When the firmʹs demand curve shifts from D1 to D2 and to D3, in the long-run we would expect:

• A)the firm to earn a zero economic profit.
• B)the firm to charge a price equal to its marginal cost.
• C)the firm to increase its output level.
• D)the firm to produce at the lowest average cost.

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Definitions:

Operating Lease

A lease agreement allowing a company to use an asset without the risks of ownership, like an asset's obsolescence.

Lessee

The party in a lease agreement who receives the right to use an asset from the lessor in exchange for payment.

Lessor

An entity or individual that leases an asset to a lessee, retaining ownership of the asset while granting usage rights for a specified period under agreed conditions.

Lessee

The party that is granted the right to use an asset for a specified period through a lease agreement.