Figure 10.8 Figure 10.8 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 10.8.Based on the diagram, one can conclude that
A)some existing firms will exit the market.
B)new firms will enter the market.
C)the industry is in long-run equilibrium.
D)firms achieve productive efficiency.

Question

Figure 10.8  Figure 10.8 shows cost and demand curves for a monopolistically competitive producer of iced tea.
-Refer to Figure 10.8.Based on the diagram, one can conclude that
A)some existing firms will exit the market. 
B)new firms will enter the market. 
C)the industry is in long-run equilibrium. 
D)firms achieve productive efficiency.

Quizplus · Accepted Answer

The entry of new firms is typically indicated by the presence of economic profits in the market, which attracts new competitors.

Figure 108 Figure 10