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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