In Theory, in the Long Run, Monopolistically Competitive Firms Earns

question 20

Multiple Choice

In theory, in the long run, monopolistically competitive firms earns zero profits. However, in reality there are some ways by which a firm can avoid losing profits. Which of the following is one such way?

• A) gradually increase the mark-up on the goods produced
• B) lower the price of its products to expand its market share
• C) identify new markets and develop products precisely for those markets
• D) find a market niche and keep it as narrow as possible so as to prevent other producers from entering this market segment

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Definitions:

Anesthetic

A medication that causes anesthesia.

Seizures

Sudden, uncontrolled electrical disturbances in the brain that can cause changes in behavior, movements, feelings, and levels of consciousness.

Blood Clotting

The process by which blood cells and substances combine to form a clot to prevent excessive bleeding.

Pharmacologic Activity

Represents the specific actions or effects of a drug or substance on the body, including therapeutic and adverse effects.