Scenario 16-1 Venya Operates an Ice Cream Shop in the Center of Center

question 95

Multiple Choice

Scenario 16-1
Venya operates an ice cream shop in the center of Fairfield. He sells several unusual flavors of organic, homemade ice cream so he has a monopoly over his own ice cream, though he competes with many other firms selling ice cream in Fairfield for the same customers. Venya's demand and cost values for sales per day are given in the following table. (Everyone who purchases Venya's ice cream buys a double scoop cone because it's so delicious.)
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-Refer to Scenario 16-1. Which of the following statements best describes the long-run adjustment in this market?

• A)One or more ice cream shops in Fairfield closes, increasing the demand for Venya's ice cream.Venya's profits increase and he sustains positive profits in the long run.
• B)One or more ice cream shops in Fairfield closes, increasing the demand for Venya's ice cream.Venya's profits increase until he earns zero profit.
• C)One or more new ice cream shops in Fairfield opens and competes with Venya for customers, reducing the demand for Venya's ice cream.Venya's profits decline until he incurs losses and exits the industry.
• D)One or more new ice cream shops in Fairfield opens and competes with Venya for customers, reducing the demand for Venya's ice cream.Venya's profits decline until he earns zero profit.

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Definitions:

Constructive Trust

A constructive trust is an equitable remedy imposed by a court to address wrongful conduct, such as fraud or unjust enrichment, creating a fiduciary relationship over the property for the benefit of the wronged party.

Entitled

Having a legal right or a just claim to receive or do something.

Trustee

An individual or firm that holds or administers property or assets for the benefit of a third party.

Beneficiary

An individual or entity entitled to benefits or advantages from something, such as a trust, insurance policy, or a will.