A gas station operates in a monopolistically competitive market and is in short-run equilibrium.Suppose that a fixed cost for this firm decreases.As a result, the firm's price will ________, the firm's output will , and the firm's economic profit will ________.
A)increase; increase;
B)increase increase; increase; decrease
C)stay the same; stay the same; increase
D)decrease; stay the same; increase

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, a decrease in fixed costs does not affect the firm's price or output in the short run, but it increases economic profit as the total cost decreases.

A Gas Station Operates in a Monopolistically Competitive Market and Is