The Diagram Below Shows Demand and Cost Curves for a Monopolistically

question 78

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm. FIGURE 11-3
-Refer to Figure 11-3.If an increase in industry demand led to an outward shift in each firm's demand curve,and no change to the firm's costs,the typical firm would

• A)be making profits and new firms would enter the industry in the long run.
• B)be making losses and some firms would exit the industry in the long run.
• C)would expand its output in the long run.
• D)increase costs in order to break even at P₁ and Q₁ in the long run.
• E)decrease costs in order to break even at P₁ and Q₁ in the long run.

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Definitions:

Geologic Timescale

A system of chronological dating that relates geological strata to time, used to describe events in the Earth's history.

Paleozoic

An era of geologic time, spanning from approximately 541 to 252 million years ago, characterized by the early development of life on Earth, including the rise of fish, amphibians, and reptiles.

Precambrian

Relating to or denoting the earliest eon in the earth's history, which ended about 541 million years ago, before the Cambrian period.

Cenozoic

The most recent of the three major subdivisions of animal and plant life on Earth, covering the time from 66 million years ago to the present.