Assuming That the Total Market Size Remains Constant, a Monopolistically

question 217

Multiple Choice

Assuming that the total market size remains constant, a monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing in the long run because

• A)new entrants into the market are more likely to have cutting edge products.
• B)as the firm raises its price in the long run, it will lose some customers to new entrants in the market.
• C)some of its customers have switched to purchasing the products of new entrants in the market.
• D)its costs of production rises.

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Definitions:

Japanese Trade Surplus

A situation where Japan exports more goods and services than it imports, leading to a positive balance of trade.

Trade Imbalance

A situation where a country's imports and exports do not balance, resulting in a surplus or deficit.

Product Quality

The characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Low-Wage Nations

Countries where workers are typically paid significantly less than those in more developed economies.