The Figure Below Shows the Revenue and Cost Curves of a Monopolistically

question 94

Multiple Choice

The figure below shows the revenue and cost curves of a monopolistically competitive firm. Figure: 11.2 In the figure,
D: Demand curve
MR: Marginal revenue curve
ATC₁ and ATC₂: Average total cost curves
MC: Marginal cost curve
In Figure 11.2, assume that the average total cost of the firm is represented by the curve ATC₂.In the long run, we would expect:

• A)entry of firms into the market because economic profits exist.
• B)exit of firms from the market because the existing firms suffer economic losses.
• C)that demand for each firm will increase.
• D)the market to become perfectly competitive.
• E)the market to become a monopoly.

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Definitions:

Farm Employment

Jobs and labor directly involved in the agricultural sector, including farming, dairy, fisheries, and other activities related to the cultivation and harvesting of products.

Parity Ratio

The ratio of the price received by farmers from the sale of an agricultural commodity to the prices of other goods paid by them; usually expressed as a percentage; used as a rationale for price supports.

Prices Received

Refers to the prices that producers get for their products at the point of sale.

Prices Paid

The amount of money expended by buyers to acquire goods or services.