Figure 11-7 Figure 11-7 Shows Short-Run Cost and Demand

question 87

Multiple Choice

Figure 11-7 Figure 11-7 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 11-7.If the diagram represents a typical firm in the designer watch market,what is likely to happen in the long run?

• A)Some firms will exit the market causing the demand to increase for firms remaining in the market.
• B)The firms that are making losses will be purchased by their more successful rivals.
• C)Inefficient firms will exit the market and new cost efficient firms will enter the market.
• D)Firms will have to raise their prices to cover costs of production.

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Definitions:

Rosalie Rayner

An American psychologist who, along with John B. Watson, conducted the famous Little Albert experiment, demonstrating that emotional reactions could be conditioned in humans.

Loud Noise

A sound that is high in volume and can possibly cause hearing damage or discomfort.

White Rat

Commonly refers to a breed of domesticated rat, often used in psychological and medical experiments.

Fear

An unpleasant emotion caused by the belief that someone or something is dangerous, likely to cause pain, or a threat.