Multiple Choice
Figure 16-7 
-Refer to Figure 16-7. The firm depicted in panel b faces a horizontal demand curve. If panel b depicts a profit-maximizing firm,
A) it could be operating in either a perfectly competitive market or in a monopolistically competitive market.
B) it would not have excess capacity in its production as long as it is earning zero economic profit.
C) it is able to choose the price at which it sells its product.
D) the firm can always raise its profit by increasing production since consumers will buy as much as the firm can produce.
Correct Answer:
Verified
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