If Price Is Less Than Average Cost in a Monopolistically

question 352

Multiple Choice

If price is less than average cost in a monopolistically competitive market

• A) there is an incentive for firms to exit the market.
• B) there is profit incentive for firms to enter the market.
• C) the market must be in long-run equilibrium.
• D) there is no incentive for the number of firms in the market to change.

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Definitions:

Overextension

A linguistic error, common in early language development, where a child applies a word in a broader context than is appropriate.

Functional Fixedness

The tendency to view an object in terms of its name or familiar usage.

Divergent Thinking

A mental approach or technique for producing inventive ideas through the examination of numerous potential answers.

Convergent Thinking

A cognitive process where an individual focuses on finding a single, correct solution to a problem, as opposed to generating multiple solutions.