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:

Endangered Resources

Resources that are in imminent danger of depletion or destruction, necessitating protection or conservation efforts.

Ambient Environment

Sensory surroundings, including temperature, odor, and sound

Sensory Environment

The surrounding environment in terms of how it is perceived through the senses.

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Informal for the emotional signals a person or the atmosphere of a place sends out to others.