-The Above Figure Shows a Motel Engaged in Monopolistic Competition

question 222

Multiple Choice

-The above figure shows a motel engaged in monopolistic competition with other motels.The figure above shows the ________ equilibrium in which the motel is ________.

• A)short-run;earning an economic profit
• B)short-run;earning a normal profit
• C)long-run;earning an economic profit
• D)long-run;earning a normal profit
• E)short-run;incurring an economic loss

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Definitions:

Fixed and Variable Costs

Costs that remain constant regardless of the level of production or business activity (fixed) and costs that vary in direct proportion to changes in activity (variable).

Cost-volume-profit Analysis

A financial approach that identifies how variations in expenses and production volume impact a business's operating profit and total earnings.

Selling Prices

The amount of money charged to a customer for a product or service, often influenced by cost, demand, and market competition.

Break-even Point

The point at which total revenue equals total costs and expenses, meaning the business makes neither a profit nor a loss.