In a Monopolistically Competitive Market with Negative Economic Profits

question 51

Multiple Choice

In a monopolistically competitive market with negative economic profits,

• A)Firms will enter until accounting profits are zero.
• B)Firms will enter until economic profits are zero.
• C)Firms will exit until economic profits are zero.
• D)No entry or exit will occur.

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Definitions:

MR (Marginal Revenue)

The increment in revenue that results from the sale of one additional unit of a product or service.

Peak Efficiency

The highest level of performance or effectiveness that a process, machine, or organization can achieve.

ATC (Average Total Cost)

The per unit cost of production, calculated by dividing the total cost by the quantity of output produced.

MC (Marginal Cost)

The additional expense associated with the production of one more unit of a product or service.