If Firms in a Monopolistically Competitive Industry Are Operating with Positive

question 295

Multiple Choice

If firms in a monopolistically competitive industry are operating with positive economic profit, over time we would see

• A) firms alter their advertising rates until they made at least normal profits.
• B) some firms entering the industry, causing the market supply curve to shift to the right, lowering price.
• C) some firms entering the industry, causing the demand curves of the existing firms to shift to the left.
• D) some firms entering the industry, causing the demand curves of the existing firms to shift to the right.

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Definitions:

Total Carrying Costs

The sum of all expenses associated with holding a particular investment or inventory, including storage, interest, depreciation, and insurance.

Discounted Price

A reduced price below the original mark-up, often to encourage purchase or clear inventory.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including repayment terms and interest rates.

Average Inventory

The mean value of inventory held by a company over a specific period of time, calculated to assess inventory levels and management efficacy.