In the Short Run, a Monopolistically Competitive Firm Produces at the Optimal

question 12

Multiple Choice

In the short run, a monopolistically competitive firm produces at the optimal level of output and is earning positive economic profits.Which of the following describes how this firm will adjust in the long run?

• A)The entry of new firms shifts the firm's demand and marginal revenue curves leftward, decreasing the firm's level of output and the price the firm can charge until price equals average total cost.
• B)The entry of new firms shifts the firm's demand and marginal revenue curves leftward, decreasing the firm's level of output and increasing the price the firm can charge until price equals average total cost.
• C)The entry of new firms shifts the firm's marginal cost and average cost curves downward, decreasing the firm's level of output and the price the firm can charge until price equals average total cost.
• D)The exit of firms shifts the firm's demand and marginal revenue curves rightward, increasing the firm's level of output and the price the firm can charge until price equals average total cost.

---

Definitions:

Support Staff

Employees who provide administrative or other support services, helping to maintain and enhance the operations of an organization.

Maximize Efficiency

The strategy of optimizing resources and processes to achieve the highest possible output or effectiveness from inputs, often with the goal of increasing profitability.

Job Complexity

Refers to the number and difficulty of tasks required in a job, as well as the variability and unpredictability of those tasks.