The Figure Given Below Shows the Revenue and Cost Curves

question 60

Multiple Choice

The figure given below shows the revenue and cost curves of a monopolistically competitive firm. Figure 11.4
MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
-Assume that the firm in Figure 11.4 is monopolistically competitive.In the long run,we would expect:

• A)the price of the firm's output to increase.
• B)entry of new firms because economic profits are positive.
• C)exit of few existing firms because economic profits are negative.
• D)the firm's demand curve to shift outward.
• E)the firm's demand curve to becomes less elastic.

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Definitions:

Consolidated Balance Sheet

A financial statement presenting the total assets, liabilities, and shareholders' equity of a parent company and its subsidiaries as one entity.

Patents

Exclusive rights granted to an inventor to manufacture, use, or sell an invention for a certain number of years.

Impairment Loss

A reduction in the recoverable value of a fixed asset or goodwill below its book value, leading to a write-down and charge against earnings.

Cost Method

An accounting method where investments are recorded at their acquisition cost without subsequent change except for impairment.