In Theory, in the Long Run, Monopolistically Competitive Firms Earns

question 20

Multiple Choice

In theory, in the long run, monopolistically competitive firms earns zero profits. However, in reality there are some ways by which a firm can avoid losing profits. Which of the following is one such way?

• A) gradually increase the mark-up on the goods produced
• B) lower the price of its products to expand its market share
• C) identify new markets and develop products precisely for those markets
• D) find a market niche and keep it as narrow as possible so as to prevent other producers from entering this market segment

---

Definitions:

Accountability

A tenet of ethics that refers to determining who is responsible for actions that were taken.

Answerability

Refers to the obligation of individuals or entities to provide an explanation or justification for their actions to stakeholders or governing bodies.

Liability

The state of being legally responsible for something, especially in terms of financial or other penalties.

Disseminating

The act of spreading information, knowledge, or ideas widely.