Use the Figure Below to Answer the Following Questions

question 63

Multiple Choice

Use the figure below to answer the following questions.

Figure 14.2.1
-Refer to Figure 14.2.1. If this firm in monopolistic competition is in short-run equilibrium, then

• A)rival firms will enter the industry.
• B)all firms will exit the industry.
• C)economic profit of all firms in the industry is zero.
• D)it produces 60 units of output to maximize economic profit.
• E)the firm's profits can be expected to rise over time.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good which consumers are willing to purchase at different prices.

Deadweight Loss

A loss of economic efficiency that occurs when equilibrium for a good or service is not achieved or is not achievable.

Per-Unit Tax

A tax that is levied on a product based on a fixed amount per unit sold, not based on the value of the product.

Quantity Tax

A tax that is levied on a specific amount or quantity of a good or service, rather than on its value.