What Is the Long-Run Effect on the Demand Curve of a Monopolistically

question 27

Multiple Choice

What is the long-run effect on the demand curve of a monopolistically competitive firm when more firms enter the market?

• A)Demand curve shifts to left.
• B)Demand curve remains the same.
• C)Demand curve shifts to right.
• D)Demand curve become flatter.

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Definitions:

Capital Expenditure

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment to improve its long-term operations.

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time for investment analysis.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from its total revenue.

Straight-Line Depreciation

A method of allocating the cost of a fixed asset evenly across its useful life.