Figure 1013 Figure 10

question 167

Multiple Choice

Figure 10.13 Figure 10.13 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 10.13.If the diagram represents a typical firm in the designer watch market, what is likely to happen in the long run?

• A)Some firms will exit the market causing the demand to increase for firms remaining in the market.
• B)The firms that are incurring losses will be purchased by their more successful rivals.
• C)Inefficient firms will exit the market, and new cost efficient firms will enter the market.
• D)Firms will have to raise their prices to cover costs of production.

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Definitions:

Stock Options

Contracts that give the holder the right, but not the obligation, to buy or sell a stock at a specific price before a certain date.

High-Growth Companies

Entities that experience significantly higher rates of growth compared to the average growth rate of their industry.

IFRS

The International Financial Reporting Standards are globally accepted rules intended to bring consistency to accounting language, practices, and statements across all industries.

Preference Shares

Shares that give holders a priority over common stockholders in terms of receiving dividends and assets in the event of a liquidation, often without voting rights.