The Figure Given Below Shows the Revenue and Cost Curves

question 97

Multiple Choice

The figure given below shows the revenue and cost curves of a monopolistically competitive firm.Figure 12.4
MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
-Which of the following is true of the model of monopolistic competition?

• A)Barriers to entry enable firms to enjoy positive profits in the long run.
• B)The number of firms declines over time as a result of economies of scale.
• C)The monopolistically competitive firms enjoy a greater market power than a monopolist.
• D)Firms tend to locate near each other in order to minimize total travel costs for consumers.
• E)The firms end up charging same prices for their individual products.

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Definitions:

Geometric Average Return

The average rate of return per period on an investment, compounded over multiple periods, which is calculated by taking the nth root of the total returns, where n represents the number of periods.

Stock

An investment vehicle that denotes holding equity in a firm, granting the holder rights to a fraction of the company's assets and earnings.

Geometric Average

A method of calculating the average rate of return of a set of values that is compounded over time.

Arithmetic Average

A measure of central tendency calculated by dividing the sum of all values in a dataset by the number of values.