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In the Short Run in a Monopolistically Competitive Industry

Question 2

Multiple Choice

In the short run in a monopolistically competitive industry:


A) MR = MC; if a firm is making zero economic profits, it will immediately leave the industry.
B) MR = MC; if a firm is making negative economic profits it will immediately leave the industry.
C) MR = MC < P; a firm can make positive, negative or zero economic profits.
D) MR = ATC < P; a firm makes positive economic profits.
E) None of the above.

Correct Answer:

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