The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-When the existing firms in a monopolistically competitive industry earn above-normal profit:
A)new firms enter into the market, and entry continues until firms earn normal profit.
B)new firms have no incentive to enter the market.
C)new firms have an incentive to enter the market but are legally barred from doing so.
D)they increase their production and lower the price level.
E)their cost structure automatically changes, eliminating the additional profit.

Question

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
  D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-When the existing firms in a monopolistically competitive industry earn above-normal profit:
A)new firms enter into the market, and entry continues until firms earn normal profit. 
B)new firms have no incentive to enter the market. 
C)new firms have an incentive to enter the market but are legally barred from doing so. 
D)they increase their production and lower the price level. 
E)their cost structure automatically changes, eliminating the additional profit.

Quizplus · Accepted Answer

The Answer is A

The Figure Given Below Shows the Cost and Revenue Curves