In long-run equilibrium for a monopolistically competitive industry,
A. all firms break even.
B. all firms suffer losses.
C. firms can earn a profit, suffer a loss, or break even.
D. all firms earn a profit.
Answer: A
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Which of the following shifts aggregate demand to the right?
a. The price level rises. b. The price level falls. c. The Fed purchases government bonds on the open market. d. None of the above is correct.
Answer the following statements true (T) or false (F)
1. If society has over-allocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs. 2. A nation's production possibilities curve shows the maximum combinations of resources that a nation can use. 3. A reduction in the unemployment rate will cause the nation's production possibilities curve to shift outwards. 4. Economic growth is shown as an increase in production from inside the production possibilities curve out toward a point on the possibilities curve.