A Picture Frame Company Operates in a Monopolistically Competitive Market

question 28

Multiple Choice

A picture frame company operates in a monopolistically competitive market. Its short-run equilibrium price is $80 and its ATC is $65. It sells 100 picture frames a week. From this we can tell:

• A) this firm is making a normal profit.
• B) other picture frame companies will want to exit the market.
• C) there are no other picture frame companies in the area.
• D) economic profits are $1,500.
• E) total profits are being maximized.

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Definitions:

Interneuron

A type of neuron that communicates between sensory neurons and motor neurons, playing critical roles in reflexes and neuronal circuits.

Sensory Neuron

A type of neuron responsible for converting external stimuli from the organism's environment into internal electrical impulses.

Motor Neuron

A type of nerve cell that transmits signals from the brain and spinal cord to muscles, stimulating them to contract.

Effector Organ

An organ or tissue that reacts to a stimulus from the nervous system to produce a specific response.