You Operate a Monopolistically Competitive Firm and You Notice That

question 32

Multiple Choice

You operate a monopolistically competitive firm and you notice that your company is making an economic profit.Which of the following is most likely to happen?

• A) Other firms in your industry will raise their prices.
• B) Other firms will enter your industry and your demand curve will shift left.
• C) Other firms will enter your industry and your demand curve will shift right.
• D) Your firm will be forced to exit the industry.
• E) Government regulators will investigate your firm for "excessive economic profit."

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Definitions:

Finance Lease

A type of lease arrangement where the lessee assumes both the financial risks and rewards of asset ownership, typically involving long-term and non-cancellable terms.

Consumer Lease

A contract in which a lessee (user) pays to use goods (like a vehicle) for a fixed period without obtaining ownership.

Common Law

A legal system based on court decisions and precedents rather than statutes.

Sales Contract

A legal agreement between a buyer and seller detailing the terms of sale for goods or services.