Refer to the Accompanying Graph

question 62

Multiple Choice

Refer to the accompanying graph. If there are exactly 20 firms in the monopolistically competitive industry that are identical to the firm shown, we would expect that, in the long run:

• A) total industry economic profit would be exactly equal to 20 times the profit of each individual firm.
• B) total industry economic profit would be greater than 20 times the profit of each individual firm.
• C) industry costs would rise.
• D) new firms would desire to enter the industry but would not be able to due to high entry barriers.
• E) total industry economic profit would be zero.

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Definitions:

Bottom-Up Processing

A type of information processing that begins with sensory input and builds up to the formation of perception in the brain.

Perceptual Adaptation

The ability of the body to adjust to an environment by filtering out distractions.

Ponzo Illusion

A visual illusion where parallel lines seem to converge, affecting the perceived size of objects within those lines.

ESP

Extrasensory perception, a claimed ability to gain information through means other than the known human senses.