Reference: Ref 15-9 (Figure: Monopolistic Competition) Refer to the Figure

question 48

Multiple Choice

Reference: Ref 15-9 (Figure: Monopolistic Competition) Refer to the figure. Suppose the figure represents a firm that operates in a monopolistic competitive market. In this market in the long run you would expect:

• A) both demand and price to stay the same.
• B) both demand and price to increase as unprofitable firms leave the industry.
• C) demand to decrease and price to fall to the point that P = AC.
• D) demand to shift left and decrease price to the point that P = MC.

---

Definitions:

Market Share

The proportion of the total sales or output produced in a market by a single company, often used as an indicator of competitiveness.

Behavioral Economics

A field of economics that examines how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions.

Health Club Memberships

Fees paid, usually on a monthly or annual basis, for access to a health club or gym's facilities and services.

Horizontal Differentiation

A market strategy where products are made to appear different from competitors' products in ways other than price, such as through branding, packaging, or quality variations.