Table 17-2

-Refer to Table 17-2.Which of the following statements regarding this monopolistically competitive firm is true?

Question

Table 17-2
 
-Refer to Table 17-2.Which of the following statements regarding this monopolistically competitive firm is true?

Quizplus · Accepted Answer

The table shows that the firm is earning a positive economic profit, meaning that it is making profits in the short run. However, in the long run, new firms can enter the market and compete with this firm, driving down its demand and reducing its profit. If this happens, some firms may leave the market until an equilibrium is reached where all firms earn zero economic profit. Since the question asks about the current state of the firm, we can only assume that it is in short-run equilibrium, where it is making positive profit. Therefore, the only true statement is that the firm is currently in long-run equilibrium, where it is earning zero economic profit. The other options are not likely as they conflict with the concept of monopolistically competitive markets.

Table 17-2 -Refer to Table 17-2.Which of the Following Statements Regarding This