Which of the Following Describes the Relative Positions of the Demand

question 156

Multiple Choice

Which of the following describes the relative positions of the demand curve and the average total cost (ATC) curve of a monopolistically competitive firm that earns a profit in the short run?

• A)In the short run, the firm's demand curve will lie above its ATC curve.The demand curve will be tangent to the ATC curve in the long run.
• B)In the short run, the firm's demand curve will lie below its ATC curve.The demand curve will be tangent to the ATC curve in the long run.
• C)In the short run, the firm's demand curve will cross its ATC curve at the ATC curve's lowest point.The demand curve will be above the ATC curve in the long run.
• D)In the short run, the firm's ATC curve will cross the demand curve at the profit maximising level of output.The demand curve will be tangent to the ATC curve in the long run.

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Definitions:

Unequal Tolerances

Tolerances that are not symmetrical, indicating different allowance limits for deviation above and below the nominal dimension.

Upper

In technical and engineering drawings, refers to the part or section above a specified reference point or line.

Lower

To decrease in position, value, or condition.

Individual Tolerances

The allowable variations in dimensions and geometry for individual component parts, specifying the permissible limits of error.