When a decrease of a firm's scale of production leads to lower average costs per unit produced, there is an increasing return to scale.

Suppose that the government passes a law requiring households to increase savings 10% above previous levels. According to Solow's growth theory, in the long run

A) output per capita grows more rapidly. B) output per capita grows at the constant steady state rate, n. C) output per capita stays constant. D) None of the above.

Which statement is true about the monopolistic competitor in the long run?

A. It will be making a profit. B. It will be taking a loss. C. It may be making a profit or taking a loss. D. It will be breaking even.