Figure 13-4 Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea.
-Refer to Figure 13-4.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 13-4  Figure 13-4 shows cost and demand curves for a monopolistically competitive producer of iced-tea.
-Refer to Figure 13-4.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 diagram likely shows a situation where firms are making economic profits, which attracts new firms to enter the market.

Figure 13-4 Figure 13-4 Shows Cost and Demand Curves